Questioning the Link Between Commodity Wealth and Oppression

Using a set of pretty charts, NYT columnist Thomas Friedman put forth in 2006 the First Law of Petropolitics which states "that the price of oil and the pace of freedom always move in opposite directions."

I've reproduced some of the charts below from the May/June 2006 issue of Foreign Policy (click to enlarge):

Although convincing, the charts are pretty misleading (see here and here for why that's the case). Still, recent academic research supports the idea that countries reliant on abundant natural resources have a higher chance of being ruled by authoritarian regimes.

And that view has become the conventional wisdom, especially with the help of Oxford economist Paul Collier's book, "The Bottom Billion: Why Poor Countries Are Failing and What Can Be Done About It." Collier's main claim is that one of the most significant causes of war in the developing world is this Resource Curse.

But two other lines of more recent work are raising doubts that there is a consistent link between resource dependence and oppressive rule. A small group of economists argue that natural resource wealth can actually promote democracy. This paper, for example, finds that when oil companies are privately owned, petrol exerts a positive impact on democracy.

And a third faction makes the point that natural resources have no effect on whether a country will develop democratic institutions or not.

Which of these three views is closest to the truth? Stanford's Stephen Haber and Victor Menaldo try to find this out.

A central problem with most of the research, they argue, is the reliance on comparing different countries across a small time period, typically between the 1970s and 2000. By then, most of these nations had already become resource dependent, so it's not easy to tell if it was the resources or some other factor (such as geography, culture, or history) which helped oppressive regimes prevail. (The statistical methods used are also called into question, but that's too technical to get into here, so read the paper if you're interested.)

To get around this, Haber and Menaldo took a longer view. They first investigated what happens to independent nations before and after their economies became resource dependent. They were able identify 10 countries which fit that bill: Mexico, Venezuela, Ecuador, Chile, Norway, Nigeria, Iran, Syria, Algeria, Yemen, Oman, Iraq, and Libya. These are all oil-rich countries except for Chile, which is the world's largest copper exporter.

They found no evidence that a growing reliance of government coffers on commodity wealth undermines democracies (through a measure called Polity Score). In other words, countries that were politically free more or less stayed that way after finding natural resources (and countries that were authoritarian before commodity discoveries remained authoritarian).

But it could be the case that resource wealth was a roadblock in the transition from authoritarianism to democracy. So, Haber and Menaldo next looked at what happened to resource-poor countries in the same region as the resource-rich country. If the level of freedom in a country like Iran, Chile, or Nigeria moved differently, and negatively, than other countries in the region they belonged to, then oil and mineral wealth could be a democracy stopper. But that didn't turn out to be the case either.

One last effect of resource wealth could be that it slows the pace of democratic transformation. For example, Chile and Mexico became democracies after discovering copper and oil, respectively. Could they have been even more politically free had they not?

This time, B and C found countries that had similar societies, economies and political institutions as the resource-rich nations right before commodity discoveries were made. They matched Venezuela with Colombia, Ecuador with Peru, Mexico with Brazil, Nigeria with Tanzania, and Chile with Argentina. Did political freedom between each paired country diverge after natural resources were found? Again, Haber and Menaldo found no evidence that this was the case. (In fact, some resource-rich countries became more democratic than their pairs.)

While the findings don't mean that in individual cases a despotic ruler doesn't successfully use resource wealth to his advantage, it strongly suggests there is no such thing as an all encompassing Law of Petro-(or some other commodity)-politics.

Comments

[huskerbob]

I did't see a mention of the end user's support of oppressive governments. Would we have military advisors in Nigeria if the price of oil was $20/barrel? Would we have supported Suharto, Hussein, or others without their valuable commodities?
The US is a major oil producer. Where is our graph with a little point denoting the USA PATRIOT act? More shallow piffle from Friedman. Does anyone take Mr. "Give war a chance" seriously anymore?

[JREwing]

Yeah, of course! Give peace a chance! No Blood for oil!

Everybody who says that please: Don't you ever drive a car, don't ever take a plane, don't ever heat your home, don't ever buy an iPhone (plastic is made of oil), don't ever use an asphalt road,... in other words don't be a part of western civilization, because for all those things you need OOOOOOOOIIIIIIIIIIIIII...

[Kunst]

So what's going to happen to western civilization when we run out of (= have a smaller and smaller fraction of what we need/want) oil?

Gandhi was asked what he thought of western civilization. He replied,
""I think it would be a good idea."

[LCACM]

In resource rich and warm contries, less intelligent people can easily thrive and multiply. Over millenia of human evolution, this has caused a decline in the average intelligence of people inhabitting resource rich and warm countries. When people lack intelligence, authoritarian regimes evolve to create some order, as this represents the lesser evil.

In colder countries, agriculture was a challenge and only intelligent war mongering individuals could survive. This has caused a higher average IQ in colder countries, but more prone to wars. For these countries, Democracy is the lesser evil as it lowers the likelihood of wars.
To force the same form of government in all countries, (Democracy in IRAQ for example) is a Trilion dollar mistake. Evolutionary differences between people, due to Temperature and Resource availability need to be taken into account.

[huskerbob]

LCACM - are you saying that eskimos have the highest average intelligence? Very cold, very few resources. Are Texans dumber because of their abundant resources and hot weather? Hmmm... maybe your comment isn't as Friedmanlike as it appears at first glance(Just kidding Texans!).