Oil Wealth and Property Rights

46 Pages Posted: 5 Jun 2020

See all articles by Indra Soysa

Indra Soysa

affiliation not provided to SSRN

Tim Krieger

University of Freiburg - Department of Economics

Daniel Meierrieks

WZB Berlin Social Science Center

Date Written: 2020

Abstract

We empirically examine the impact of oil wealth on property rights protection for a sample of 156 countries between 1960 and 2014. We find that higher levels of oil wealth result in weaker private property rights. This result is robust to different instrumental-variable approaches and operationalizations of oil wealth and economic institutions. We argue that oil wealth creates an oil elite that wields disproportionate economic and political power over society. The elite uses this power to buy support for weak property rights from their supporters (the selectorate), while also punishing the opposition (i.e., the non-selectorate). Indeed, we also provide evidence that oil wealth leads to more clientelistic policies (benefitting the selectorate) but also more punitive measures (e.g., in the form of exclusion from state jobs) likely administered to the non-selectorate. We argue that the elite favors weak property rights because this blocks potential economic challengers, allowing for the consolidation and perpetuation of the economic and political status quo.

Keywords: oil wealth, economic institutions, property rights, resource curse, selectorate theory

JEL Classification: D720, D730, O130, O170, Q340, Q380

Suggested Citation

Soysa, Indra and Krieger, Tim and Meierrieks, Daniel, Oil Wealth and Property Rights (2020). CESifo Working Paper No. 8319, Available at SSRN: https://ssrn.com/abstract=3618843

Indra Soysa (Contact Author)

affiliation not provided to SSRN

Tim Krieger

University of Freiburg - Department of Economics ( email )

University of Freiburg
Wilhelmstr. 1b
Freiburg, D-79085
Germany

HOME PAGE: http://www.wguth.uni-freiburg.de

Daniel Meierrieks

WZB Berlin Social Science Center ( email )

Reichpietschufer
50
Berlin, D-10785
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
16
Abstract Views
159
PlumX Metrics