Oil rents, corruption, and state stability: Evidence from panel data regressions

Rabah Arezki, Markus Brückner*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

166 Citations (Scopus)

Abstract

We examine the effects of oil rents on corruption and state stability exploiting the exogenous within-country variation of a new measure of oil rents for a panel of 30 oil-exporting countries during the period 1992-2005. We find that an increase in oil rents significantly increases corruption, significantly deteriorates political rights while at the same time leading to a significant improvement in civil liberties. We argue that these findings can be explained by the political elite having an incentive to extend civil liberties but reduce political rights in the presence of oil windfalls to evade redistribution and conflict. We support our argument documenting that there is a significant effect of oil rents on corruption in countries with a high share of state participation in oil production while no such link exists in countries where state participation in oil production is low.

Original languageEnglish
Pages (from-to)955-963
Number of pages9
JournalEuropean Economic Review
Volume55
Issue number7
DOIs
Publication statusPublished - Oct 2011
Externally publishedYes

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