As we see the ensuing crisis of two Presidents in Venezuela, this video by Vox is fantastic context to the problems the country is facing.
The tenet that ‘oil undermines democratisation’ is a speculative myth, however due to its easily digestible nature it has a wide scope in the media despite dubious analytical evidence. The resource myth is like that of the myth of King Midas, most literature in the area has made calamitous flaws but still argues its case in the media and academia. Many scholars argue a red herring, for ‘correlation does not equal causation’. I argue an ‘overarching meta-narrative’ concept such as the ‘resource curse’ does not help academic study; it is a far too simplified concept that denies polysemous areas of political spectrum analysis. Oil has many varied affects on different societies and nations; a ‘one-size fits all’ theory of oil wealth’s affect on a nation’s democracy is both absurd and facile. Thusly I argue that oil does not undermine democracy, and that in fact it can have positive democratic effects or often diminutive outcomes on polities. Factors other than oil-wealth are more important as to why countries fail to democratise, whether socio-historical, institutional, political or economical.
As a beginning of the refutation of the posited ‘oil/anti-democratisation’ link one should look at the historical development of resource rich western nations, such as Norway, Canada and the United Kingdom, all were economically stimulated by oil abundance. This positive economic development led to continued democratic development thus in a historical perspective the oil/anti-democratisation link makes little sense, it is only relevant to developing nations which do not already have in existence democracy. Little weight is placed in pro oil/autocracy literature of the idea of ‘path dependence’; the patent issue appears to not be the oil, ‘but the political and economic system that predated it’. Existing state structure and institutions are vital to democratic support and survival; combined with the will of the populace. New oil-states ‘…have not gone through the process of extracting taxes from a reluctant population, granting rights in return’ and thus popular democratic will is not sacrosanct. Thus without will from the people and state, and the means with which to educate and enact democracy, oil-wealthy states will not democratise, therefore it is arguable that poor state-structure can restrict democracy to a degree that renders oil wealth inconsequential.
Alternative explanations are superior to the correlation between oil-states and lack of democracy; ‘historical institutionalism’ argues that ‘variations in political developments are rooted during a “critical juncture” in history’. This revisionism also brings into disrepute one of the key causal mechanisms Ross argues, that of the ‘rentier state’. A historical reading of nations such as Kuwait and Saudi Arabia shows that, these nations were never democratic. Kuwait’s economy ‘before oil was based on pearls’, although there was a rent paying merchant class who remunerated almost all the taxes, democracy was never formed. Thus there is logical fallacy in believing its sudden oil riches would change this path, when historically the entire state-structure is geared towards autocratic power in the hands of the few, with low taxes and low populace representation. With these foundations democratisation is unlikely with or without oil wealth.
Rentier states as Ross argues are ‘oil-rich regimes which use low taxes and patronage to relieve pressures for more democracy’, today Kuwait and Saudi Arabia do have low taxes, with citizens given oil money rather than democratic power, however as their history has shown there has never been democracy. Ross’s argument that the rentier effect hinders democracy is flawed, he relates correlative evidence into a causal mechanism, and places too little weight on the obvious concept that ‘regime type is causally posterior to oil discovery’. Ross even agrees in a footnote that when historical characteristics are incorporated using ‘statistical fixed effects, the impact of oil-dependence on regime type disappears’. The rentier effect may have some consequences on democratic ‘accountability’ but Ross’ and many other academics literature fails to truly examine the reasons for the rentier effect. A key cause for the effect is existing state-structure; the oil-wealth is a secondary inference, thus emphasising the spurious link between oil-rents and lack of democratisation.
Oil-rents are ‘not a robust factor behind lack of democracy’ in Middle-Eastern countries; emphasizing another problematic question of the pro oil/authoritarianism literature. There are issues with their statistical analysis, such as the issue of measuring ‘oil-rents’, whether total oil-wealth rents or yearly rents, the use of either giving very varied and contradictory results. A similar issue is the problem of trying to measure democracy, or quality of democracy, problems have arisen in studies on how to accurately measure ‘freedom’ for example. Ross uses his own inadequate measurements such as ‘landline telephones per person’, and utilises Freedom House’s dubious yearly statistics. The statistical use of ‘oil-dependence rather than oil-abundance’ by oil-exports divided by GDP has methodological flaws for it denies domestic sales and does not provide statistically sound results. An improved causal variable was used in ‘oil-rent per capita’; however regression based fixed-effect models do not generate statistically important results without historical factors, instead academic inference is used to infer a linear model favouring anti-democratic state traits. When in reality statistical results are much more spatial and anomalous with a difficult to read non-linear vectorisation.
Causality between oil-rents and authoritarianism is much more likely to do with the existing state-structure, society and institutions, for historical variables disallow the filament of crude-oil’s ‘rentier effect’. Rents may allow a state to continue its trajectory as an anti-democratic regime however in general ‘past regime type is a strong predictor modern regime type’. Similarly with oil rents there is a ‘non-linear effect, countries at the extreme have high inertia’ for regime change to both democracy and authoritarianism.
As a case study to highlight that the rentier effect needs an integral historical perspective and how many countries do not fit the rentier model, Latin America is an interesting case. There is more evidence in Latin America that the rentier effect actually positively effects democracy. In countries with a ‘propensity for democracy’ the ‘oil-rents are associated with democracy, not authoritarianism’. This is due to Latin Americas interesting historical development, and is shown in nations such as Venezuela and Mexico. Studies of rentier states in Latin America ‘contradict theories that link resource rents only to authoritarianism’, thus it appears that through the rentier effect oil does arguably not undermine democratisation, and can even support and aid it. Rentier states debatably would continue to have the power in the hands of a few, where the state has always been authoritarian, whether or not there is oil dependence. It seems in terms of Latin American rentier states oil-rents breed democracy, but only if there is democratic will, as per Venezuela, which ‘transitioned to democracy at the height of its oil wealth’. Conversely oil rents breed autocracy where will for autocracy is strongest as in Saudi Arabia. It appears nevertheless this is a loose correlation as many nations transitioned to democracy after oil-booms such as Chile and Mexico which are now both relatively successful democracies. Case studies illustrate that there is no simple oil-rents equals less democracy link.
Another of Ross’ professed causal mechanisms is the repression effect, through which I will highlight the importance of regionalism to regime type. The repression effect is the theory that authoritarianism can be sustained through oil wealth as it enables regimes to spend more on security and repression forces. However this again is an overly simplified causal mechanism, authoritarian regimes are inherently going to be repressive, and they would achieve this repression through other means if oil wealth were not available. One can see this in many repressive countries which lack oil resources, such as Sudan which still has low oil revenue. In terms of the maintenance of authoritarian states and the lack of democratisation the repression effect mechanism is very weak.
South America as a regional case study is useful for showing how the repression effect is a poor causal mechanism, several South American countries democratised from repressive regimes to democracies during oil-fuelled economic booms. Venezuela was rid of repressive dictator Jiménez on the 23rd January 1958 despite an oppressive-rentier state of 50/50 profits between oil companies and state emerging in 1941. Similarly Brazil transitioned away from their military government, in March 15, 1985 to a representative democracy. This was during a repressive military government and during huge oil boom through Petrobras in the early 80’s.
A superior reason for the repression oil/anti-democratisation link is that ‘political regime outcomes may be interdependent’, studies on the oil/anti-democratisation link fail to take into account regional geographical and societal factors. This is the case in the Middle-East; there is measurable ‘geographic clustering of regime types, even where resource endowments vary’. Geographic proximity, ‘facilitates the transmission of ideas, appropriateness, and comparability’ which could diffuse either democracy or authoritarianism. Thus oil’s effect on authoritarian regimes lack of democratisation is questionable, with the repression effect being mostly negligible, conversely factors such as the lack of ‘democratic diffusion’ appear more likely as to why oil-rich states repress and fail to democratise.
For the Middle-East, oil resources appear to not affect the overtly repressive undemocratic nature of many of the Gulf States, and other Persian nations such as Iran. Another explanation must be found, which I would argue again would be a states pre-oil political nature, however socio-political diffusion influence also plays a key role, for ‘democratic ideas spread across borders’, however without social-genesis of these ideas across a region many states will inevitably end up repressive and undemocratic despite increased oil profits.
Academics also highlight the ‘modernisation effect’ as a causal mechanism for oil hindering democratisation, the argument being that ‘dependence on commodity exports retards social and cultural changes necessary for democracy’. However this again is a reprehensible explanation for the lack of democratisation in many developing states. Even if Lipset’s defined ‘modernisation’ occurs in these pre-oil repressive nations, there is a difference between economic ‘modernisation’ and political ‘modernisation’. It is vital that there is political legitimacy for the flourishing of democracy. It is important to differentiate the two ideas, as they are not mutually exclusive, something which many academics of the pro-curse camp fail to recognise.
Regionalism is important to regime type, something the studies by Barro, Wantchekon and Ross fail to take into account. They generally find that ‘authoritarian regimes have lasted longer in countries with oil wealth’, however it is due to existing repressive state structure that the repression remains, albeit with more economic modernisation and wealth from oil. Modernisation theory is interesting as one would think that economic development would lead to societal development, taxation and thus a wish for representation; however I would argue modernization theory in the context of oil states is far to inefficient to be an effective theory. Instead I would argue the reason many oil-rich states fail to democratise through modernisation theory is due to ‘endogenous resource reliance’. Nations with a low state-capacity, through ineffective institutions which lack revenue will, ‘heavily discount the future’ and utilise less costly revenue sources such as oil, to the detriment of a proper industrialised and varied economy. Accordingly this denies proper development of institutions and thus democracy. This reversal of the causal arrow from the oil revenue itself to the state’s capacity is a simple one which shows stronger in evidence in terms of oil-nations.
Most of the strongest democracies in the world even in Africa have a well grounded tradition of democracy, such as with Botswana, which had its democratic tradition before major resource discoveries, despite its proximity to The Democratic Republic of the Congo, one of the least democratic yet resource rich nations. This is an interesting case in point for both countries are resource rich and yet only one has democratised. It is arguable the reason for this being its ‘structured and powerful institutions in place predating’ independence, rather than its resource dependence. In Botswana’s case this would be the framework left by British rule post independence in June 1964.
To conclude, oil does not hinder democratisation, ‘heterogeneity of a country experiences and institutional structures of governance account for regime variance, not resource endowment per se’. It can be argued pro-oil curse literature suffers from an omitted variable bias, with the models interpreting oil correlation, as causation. Weak state-capacity jointly determines both ‘dependence on natural resources and persistent authoritarianism’. The hypothesis associating oil-abundance with less democracy is weak when statistics include historically relevant variables. Socio-historical factors and institutional structures are what cause today’s variation in political regimes around the world, the forces for future democratization are in the ‘heterogeneity of nations’. Thus it is with policy reform and societal reform that institutions can be improved in oil-rich states and non oil-rich states alike allowing for democratic transition.
The oil/anti-democratisation link can be understood to be a ‘red-herring’. One can infer from simplified evidence as Ross did, that oil must negatively affect democratisation due to ineffective causal reasons, this however is overly simplified. It is not so much the oil itself that proverbially plagues Midas, but the cognition of the significance of oil. It is no surprise that the prevalence of the ‘resource curse’ is so great in the press; for it is an attractive quotable simplified way for people to look at the reasons why countries haven’t democratised. Other factors are a more sublime explanation; for lack of democratisation is a much deeper and more complex problem, where social, anthropological, historical, and economic factors all engage an imperative role. However it appears for the media that it is much easier to look to oil and shout ‘bogeyman’, whereas in actuality nations are not un-democratically ‘tortured by the hateful “black” gold’.
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When Britain handed Hong Kong back to China in 1997, Chinese leaders agreed that Hong Kong would be able to keep its economic and political systems, including some of the civil freedoms denied to China’s citizens on the mainland, for the next 50 years. Although Hong Kong still has nearly 30 years of semi-autonomy left, China has started tightening its grip, and many believe it is chipping away at Hong Kong’s freedoms.
Famous for its football team, Uruguay is one of the 9 countries that has ever won the Soccer World Cup. This is a whole of an achievement given that Uruguay is one of the smallest countries in all across South America, both in population and surface. Nonetheless, Uruguay is also known as one of the most stable economies of the continent, one of the wealthiest countries in LATAM (GDP per capita wise), good public services and civil rights. Compared with its neighbours, Brazil and Argentina, Uruguay is amazing. And, thanks to this, one of its latest president, Jose Mugica, became a left wing rock star in all around the world. Nonetheless, Uruguayan economy faces lots of challenges now. So the question here is… why is Uruguay’s economy more successful than others?
We will see what happens…