Oil and democracy

Click on image for larger version. Credit: Bloomberg

Bloomberg:

So does oil inhibit democracy? This is perhaps the central question of our discussion this week about the historical lessons the Arab Spring nations should pay attention to.

Michael L. Ross, a professor of political science at the University of California, Los Angeles, has been researching this issue for a decade. In a 2001 paper, and in updated research in 2009,Ross argues that oil wealth deeply impedes democratic transitions from authoritarian states.

He also found that the undemocratic effects of oil vary by region and have fluctuated between 1960 and 2002. The one causal mechanism for the "oil-autocracy link," Ross wrote in 2009, was the "rentier effect," in which oil states use low taxes and high spending to quell democratic pressures.

To reverse these undemocratic effects, oil states need revenue transparency and institutions accountable to the public -- as we discussed May 23.