Summary of my book-in-progress, From Institutions Curse to Resource Blessing: The Endogeneity of Natural Resources and their Effects on Politics and Economics.
Is there an institutions curse? This book challenges the almost universally held view that there is a causal relationship running from oil to underdevelopment. Instead, both a natural resource based economy and the pathologies attributed to the resource curse are jointly determined by weak state capacity and low quality institutions. Revenue starved states with short time horizons are more likely to launch oil exploration efforts and goose the production of extant wells. And because they face high fiscal transaction costs and cannot make credible promises, they are unlikely to curate vibrant and diversified economies. This book finds evidence for these claims after controlling for geological endowments, oil prices, and production costs. It also finds that, besides overly relying on natural resources, weak states indulge in crony capitalism, urban bias, and macroeconomic populism. In other words, they are cursed by their institutions.
Is there a resource blessing? This book also rejects the view that resources engender a rentier effect. Oil rents do not displace ordinary government revenues; nor are they causally associated with the under-provision of public goods or similar welfare enhancing policies. Indeed, once omitted variable bias and reverse causation are adequately addressed, the effect of oil on taxation, institutional quality, and public goods is positive. In other words, despite being cursed by their institutions, weak states are blessed by their natural resources.
After making the case for these patterns globally, this book zooms in on the Middle East and North Africa (MENA), an area of the world that has been held up as a poster child of the resource curse. We demonstrate that oil has made no meaningful difference to this region's development. Instead, variation in political stability, institutional quality, educational outcomes, and economic growth in the MENA is explained by these countries' inveterate cultural practices and institutions. While the monarchies, which emerged and survived in extremely arid places that experienced millennia of pastoral nomadism, tribalism, and traditionalism, are stable and wealthy societies, the republics are afflicted with numerous development pathologies, despite prolonged exposure to settled agriculture, political centralization, and modernization. The Arab Spring has helped showcase this monarchical exceptionalism.
Here is the chapter's abstract:
This chapter helps gain purchase on the political instability that buffeted the MENA during the Arab Spring. The region’s monarchies have largely elided turmoil and violence. The “republics” have not. This chapter shows that this has also been the case historically. Furthermore, the association between political stability and monarchy is not driven by oil wealth; nor does oil explain why monarchies have higher quality institutions, provide more public goods, and have higher levels of educational attainment and faster economic growth. To help understand why there is a correlation between monarchy and these outcomes in the MENA, this chapter introduces a theory about how an invented, yet historically rooted, political culture can solve a ruler’s credible commitment problem. By securing elites’ rights and interests, it bolsters their support of the regime. This chapter also illustrates the evolution of monarchic political cultures over the history of the MENA. We document the geographic and biogeographic underpinnings of monarchy, arguing that extreme aridity and pastoral nomadism centered on camel herding sustained a tribal social structure. This unique equilibrium held despite millennia of imperialism, the spread of Islam, and European colonialism. A case study of Qatar’s history also corroborates this theory.
Supplementary (web) Appendices for Published Papers
Supplementary Appendices for Albertus, Michael and Victor Menaldo. 2012. "If You're Against Them You're With Us: The Effect Of Expropriation On Autocratic Survival." Comparative Political Studies.
Supplementary Material for Victor Menaldo. 2012. "The Middle East and North Africa's Resilient Monarchies." Journal of Politics.
Supplementary Material for Mike Albertus and Victor Menaldo. Forthcoming. "Gaming Demoracy."British Journal of Political Science.
Odds & Ends