Since the mid-2010s, many governments have pledged to reduce theirsubsidies for fossil fuels. Yet, it is unclear whether these reforms have beenimplemented, with prior studies showing conflicting results. Here we collectoriginal monthly data on the 21 countries with the largest gasoline subsidiesin the 2003–2015 period and evaluate their reform efforts from 2016 to2023. Since 2016, there has been an increase in the frequency and ambitionof subsidy reforms but a drop in their durability: just 30% of the reformssurvived for 12 months, and only 9% survived for 36 months. Subsidies rosefor 12 countries in our sample and were virtually unchanged in the other9. This pattern calls into question the effectiveness of recent strategies forreducing fossil fuel subsidies.

Many economists argue that climate change is a result of market failure and needs market-based solutions. Political scientists tend to see climate change as a result of political failures and emphasize the roles played by interest groups, social movements, and political institutions. This review article compares the two approaches and discusses their policy implications. It describes how carbon pricing has become central to economists' policy advice, how economists use integrated assessment models to estimate the "correct" carbon price, and why these estimates are both deeply uncertain and heuristically valuable. By contrast, political scientists seek to explain variation in the tepid and halting climate policies of governments, arguing that they are the result of collective action problems, time inconsistencies, and increasingly distributive conflict. Many political scientists also suggest that certain policies, including subsidies for renewable energy and green industrial policies, will have greater political success because they tend to create new constituencies that can protect climate policies against future reversals. Both approaches are challenged by heightened partisan polarization in the United States and Europe. The author discusses three books that offer new insights about the distributional struggles over climate policies. These books, alongside other recent studies, help to explain why the climate policies of most governments have been frail and uneven, and what may be necessary to change this.

Social scientists should be more deliberate in how they define and measure government efforts to reduce greenhouse gas emissions. The authors highlight key distinctions among three dimensions of climate policy: the commitments made by governments, the actions that governments take, and the outcomes they produce. In turn, the authors detail the challenges of measuring these dimensions, and discuss the tradeoffs of alternative measurement strategies, including how well they meet the accepted standards for measurement validity. The authors also identify promising avenues for further research.

We survey the performance of Sub-Saharan Africa's resource-dependent economies from 1999 to 2019, a period covering the commodity price supercycle, which generated enormous rents for natural resource producers. We show that despite high overall growth rates, these states failed to convert their windfalls into broader forms of development: their economies diversified more slowly than resource-poor countries in Sub-Saharan Africa; their economies became less complex; their low institutional quality regressed further; and they achieved slower progress on human development than their resource-poor counterparts. Case studies of the top three diversifiers-Botswana, Zambia, and Nigeria-underscore the challenges of diversification. We suggest two broad reasons for these patterns. First, economic diversification, especially export diversification, is intrinsically difficult for low-and-middle income resource-dependent countries, due to both Dutch Disease effects and the isolated product spaces of the oil, gas, and minerals sectors. Second, diversification in resource-dependent states is sensitive to institutional quality, yet institutional quality is sticky and typically constrained by political interests that are hostile to reforms. This implies that the development challenges of oil, gas, and mineral dependent states over the coming decades will be significant and difficult to surmount. We suggest a more modest set of goals focused on diversifying into related activities in the extractives value chain and unrelated sectors in the domestic economy, as well as narrowly-focused efforts to boost non-resource export industries.

For countries to rapidly decarbonize, they need strong leadership, according to both academic studies and popular accounts. But leadership is difficult to measure, and its importance is unclear. We use original data to investigate the role of presidents, prime ministers, and monarchs in 155 countries from 1990 to 2015 in changing their countries’ gasoline taxes and subsidies. Our findings suggest that the impact of leaders on fossil fuel taxes and subsidies is surprisingly limited and often ephemeral. This holds true regardless of the leader’s age, gender, education, or political ideology. Rulers who govern during an economic crisis perform no better or worse than other rulers. Even presidents and prime ministers who were recognized by the United Nations for environmental leadership had no more success than other leaders in reducing subsidies or raising fuel taxes. Where leaders appear to play an important role—primarily in countries with large subsidies—their reforms often failed, with subsidies returning to prereform levels within the first 12 months 62% of the time, and within 5 years 87% of the time. Our findings suggest that leaders of all types find it exceptionally hard to raise the cost of fossil fuels for consumers. To promote deep decarbonization, leaders are likely to have more success with other types of policies, such as reducing the costs and increasing the availability of renewable energy.

Governments have long faced pressure to address the climate crisis by increasing taxes on fossil fuels. It is unclear how they have responded. Fossil fuel taxes and subsidies are hard to measure and often hidden in complex policy instruments. We collect and analyze an original high-frequency measure of gasoline taxes and subsidies, covering 157 countries. Our analysis yields three findings: despite rising alarm about climate change, from 2003 to 2015 there was little change in net fuel taxes and subsidies at a global level; these taxes and subsidies appear to be driven by the same fiscal conditions that determine other types of taxes; and reforms are overwhelmingly associated with idiosyncratic country-level conditions. These patterns suggest that fossil fuel taxes are determined by a country’s revenue needs, not its political institutions or environmental commitments. They also have significant implications for debates over policies to reduce greenhouse gas emissions.

The “resource curse” is often understood to imply poor growth in the non-resource sectors of the economy, but research into the diversification performance of resource-rich countries is limited. This paper surveys recent evidence and identifies empirical patterns in the economic diversification of resource-rich countries. Diversification is measured using the growth of per capita non-resource (manufacturing and services) sectors in domestic and export markets, which has a cleaner interpretation than competing measures. This measure is used to evaluate the long-term diversification of countries that started off as resource-dependent, and to rank countries according to their performance. We then identify policy-relevant correlates of diversification at the national level, including the acquisition of human capital, public and intellectual capital, and firm dynamism. More resource-dependent countries appear to perform worse on measures of human capital and intellectual capital, but more resource-abundant countries perform better on public capital and human capital accumulation. We examine the mechanisms behind diversification performance through in-depth case studies of Oman, Laos, and Indonesia, and conclude by identifying policy lessons and future research directions.

The effects of democracy on living conditions among the poor are disputed. Previous studies have addressed this question by estimating the average effect of democracy on early-life mortality across all countries. We revisit this debate using a research design that distinguishes between the aggregated effects of democracy across all countries and their individual effects within countries. Using Interrupted Time Series methodology and estimating model parameters in a Bayesian framework, we find the average effect of democracy on early-life mortality to be close to zero, but with considerable variation at the country-level. Democratization was followed by fewer child deaths in 21 countries, an increase in deaths in eight, and no measurable changes in the remaining 32 cases. Transitions were usually beneficial in Europe, neutral or beneficial in Africa and Asia, and neutral or harmful in Latin America. The distribution of country-level effects is not consistent with common arguments about the conditional effects of democratic transitions. Our results open a new line of research into the sources of theses heterogeneous effects.

Evidence has shown that petroleum wealth is associated with less transparency and at the same time less tax collection. In this paper, we find that the two issues are linked through the citizens’ tax evasion behavior. We develop a model to explain this link and conduct extensive empirical tests of its validity. The explanation is that officials tradeoff greater transparency to improve tax compliance against less transparency to increase gains from corruption. Oil windfalls diminish tax revenue needs, causing officials to optimize on less transparency. Seeing this, citizens optimize on a lower level of tax compliance. At equilibrium, both decline with a positive oil shock. We also study the alternative channel in which tax compliance responds to enforcement. Transparency is found to be the more robust channel. Ignoring citizens’ strategic behavior would lead to predicting suboptimal investment in state capacity for tax enforcement. Using giant oil discoveries data combined with oil price data, we develop a dynamic composite instrument and estimate the model with a dynamic panel system generalized method of moments. We find robust support for our explanation and the model's deep structure for 130+ countries and the 1980–2010 period.

Oil-exporting countries are often advised to diversify their economies, yet surprisingly little is known about how this can be done. Research on this issue has been constrained by missing and inconsistent data, selection bias, and the use of uninformative measures of diversification. This paper uses a novel measure of export concentration from the IMF to describe diversification trends between 1962 and 2010 among the 38 largest oil producers. It documents three empirical patterns: a rising gap in export diversification between oil-producing states and non-oil states; the heightened concentration of exports in most oil and mineral producing states from 1980 to 2010; and the heterogeneous performances of the oil producers over the long run. Four striking patterns stand out: the oil exporters have developed the most narrowly-specialized economies in the global market, making them uniquely vulnerable to price shocks; among the oil exporters, the African states have the poorest diversification record; successful diversification is broadly associated with lower levels of oil wealth, which is consistent with a Dutch Disease effect; and success is not strongly associated with population, government effectiveness or democratic accountability.

To reduce greenhouse gas emissions in the coming decades, many governments will have to reform their energy policies. These policies are difficult to measure with any precision. As a result, it is unclear whether progress has been made towards important energy policy reforms, such as reducing fossil fuel subsidies. We use new data to measure net taxes and subsidies for gasoline in almost all countries at the monthly level and find evidence of both progress and backsliding. From 2003 to 2015, gasoline taxes rose in 83 states but fell in 46 states. During the same period, the global mean gasoline tax fell by 13.3% due to faster consumption growth in countries with lower taxes. Our results suggest that global progress towards fossil fuel price reform has been mixed, and that many governments are failing to exploit one of the most cost-effective policy tools for limiting greenhouse gas emissions.

The more that states depend on oil exports, the less cooperative they become: they grow less likely to join intergovernmental organizations, to accept the compulsory jurisdiction of international judicial bodies, and to agree to binding arbitration for investment disputes. This pattern is robust to the use of country and year fixed effects, to alternative measures of the key variables, and to the exclusion of all countries in the Middle East. To explain this pattern, we consider the economic incentives that foster participation in international institutions: the desire to attract foreign investment and to gain access to foreign markets. Oil-exporting states, we argue, find it relatively easy to achieve these aims without making costly commitments to international institutions. In other words, natural resource wealth liberates states from the economic pressures that would otherwise drive them toward cooperation.

Since 2001, hundreds of academic studies have examined the “political resource curse,” meaning the claim that natural resource wealth tends to adversely affect a country's governance. There is now robust evidence that one type of mineral wealth, petroleum, has at least three harmful effects: It tends to make authoritarian regimes more durable, to increase certain types of corruption, and to help trigger violent conflict in low- and middle-income countries. Scholars have also made progress toward understanding the mechanisms that lead to these outcomes and the conditions that make them more likely. This essay reviews the evidence behind these claims, the debates over their validity, and some of the unresolved puzzles for future research.

The claim that oil wealth tends to block democratic transitions has recently been challenged by Haber and Menaldo, who use historical data going back to 1800 and conclude there is no “resource curse.” We revisit their data and models, and show they might be correct for the period before the 1970s, but since about 1980, there has been a pronounced resource curse. We argue that oil wealth only became a hindrance to democratic transitions after the transformative events of the 1970s, which enabled developing country governments to capture the oil rents that were previously siphoned off by foreign-owned firms. We also explain why the Haber–Menaldo study failed to identify this: partly because the authors draw invalid inferences from their data and partly because they assume that the relationship between oil wealth and democracy has not changed for the past 200 years.

Mineral wealth tends to make countries less democratic and more likely to experience a civil war. Many countries also find it hard to use their natural resource revenues to make high-quality, growth-enhancing investments. I argue that these problems are caused, in part, by the unusual qualities of resource revenues their great size, their non-tax source, their lack of stability, and their secrecy. While there is no universal formula for changing these four qualities, I present a menu of policies that could make natural resource revenues smaller, smoother and more transparent, and hence easier for governments to invest productively.

My 2008 article suggested that oil wealth, but not Islam, has impeded progress towards gender equality in the Middle East. Groh and Rothschild re-examine one part of my study, which reported a statistical correlation between oil rents and female labor force participation; they argue that the ‘‘deep cultural history’’of the Arabian Peninsula offers a better explanation for the observed correlations. In this brief reply, I note that they do not accurately describe my conclusions and analysis; that other evidence in the article does not support their argument; and that they have not identified what makes the Arabian Peninsula so different from the rest of the Middle East—apart from its extraordinary oil wealth.

Women have made less progress toward gender equality in the Middle East than in any other region. Many observers claim this is due to the region's Islamic traditions. I suggest that oil, not Islam, is at fault; and that oil production also explains why women lag behind in many other countries. Oil production reduces the number of women in the labor force, which in turn reduces their political influence. As a result, oil-producing states are left with atypically strong patriarchal norms, laws, and political institutions. I support this argument with global data on oil production, female work patterns, and female political representation, and by comparing oil-rich Algeria to oil-poor Morocco and Tunisia. This argument has implications for the study of the Middle East, Islamic culture, and the resource curse.

Many scholars claim that democracy improves the welfare of the poor. This article uses data on infant and child mortality to challenge this claim. Cross‐national studies tend to exclude from their samples nondemocratic states that have performed well; this leads to the mistaken inference that nondemocracies have worse records than democracies. Once these and other flaws are corrected, democracy has little or no effect on infant and child mortality rates. Democracies spend more money on education and health than nondemocracies, but these benefits seem to accrue to middle‐ and upper‐income groups.

Studies of natural resource wealth and civil war have been hampered by measurement error, endogeneity, lack of robustness, and uncertainty about causal mechanisms. This paper develops new measures and new tests to address these problems. It has four main findings. First, the likelihood of civil war in countries that produce oil, gas, and diamonds rose sharply from the early 1970s to the late 1990s; so did the number of rebel groups that sold contraband to raise money. Second, exogenous measures of oil, gas, and diamond wealth are robustly correlated with the onset of civil war. Still, these correlations are based on a small number of cases, and the substantive effects of resource wealth are sensitive to certain assumptions. Third, petroleum and diamond production lead to civil wars through at least three different mechanisms. Finally, the only resource variable robustly linked to conflict duration is a measure of “contraband,” which includes gemstones, timber, and narcotics.

Since the late 1990s, there has been a flood of research on natural resources and civil war. This article reviews 14 recent cross-national econometric studies, and many qualitative studies, that cast light on the relationship between natural resources and civil war. It suggests that collectively they imply four underlying regularities: first, oil increases the likelihood of conflict, particularly separatist conflict; second, ‘lootable’ commodities like gemstones and drugs do not make conflict more likely to begin, but they tend to lengthen existing conflicts; third, there is no apparent link between legal agricultural commodities and civil war; and finally, the association between primary commodities - a broad category that includes both oil and agricultural goods - and the onset of civil war is not robust. The first section discusses the evidence for these four regularities and examines some theoretical arguments that could explain them. The second section suggests that some of the remaining inconsistencies among the econometric studies may be caused by differences in the ways they code civil wars and cope with missing data. The third section highlights some further aspects of the resource-civil war relationship that remain poorly understood.

Recent studies have found that natural resources and civil war are highly correlated. Yet the causal mechanisms behind the correlation are not well understood, in part because data on civil wars is scarce and of poor quality. In this article I examine thirteen recent civil wars to explore the mechanisms behind the resource-conflict correlation. I describe seven hypotheses about how resources may influence a conflict, specify the observable implications of each, and report which mechanisms can be observed in a sample of thirteen civil wars in which natural resources were “most likely” to have played a role. I find that two of the most widely cited causal mechanisms do not appear to be valid; that oil, nonfuel minerals, and drugs are causally linked to conflict, but legal agricultural commodities are not; and that resource wealth and civil war are linked by a variety of mechanisms, including several that others had not identified.

Does their need for greater tax revenue force governments to democratize? Most research on contemporary democratization says little about the effects of taxation. Yet there are good reasons to believe that taxation led to representation in the past: representative government first came about in early modern Europe when monarchs were compelled to relinquish some of their authority to parliamentary institutions, in exchange for the ability to raise new taxes; similarly, the war for independence in the United States began as a rebellion against British taxes. Some scholars argue that a comparable process is occurring today: the need to raise taxes forces authoritarian governments to democratize. These claims have never been carefully tested. In this article, the ‘taxation leads to representation’ argument is explored and tested using pooled time-series cross-national data from 113 countries between 1971 and 1997. One version of the argument appears to be valid, while another does not. These findings are important both for scholars who wish to understand the causes of democracy, and for policy makers who wish to promote it.

The dynamics of popular rebellions against authoritarian governments are examined by focusing on how the public's beliefs about the durability of an authoritarian government may have a self-fulfilling quality. This self-fulfilling quality gives both government and opposition leaders an incentive to make exaggerated “announcements” about the likelihood of a rebellion in the near future. Yet if their predictions are too far off, they will lose credibility, and their future announcements will carry less weight. The case of Indonesia, where the government's loss of credibility and the opposition's ability to exploit this weakness led to a popular uprising in 1998, is examined. A computational model consisting of a government, an opposition, and a population of citizens with heterogeneous preferences is developed to explore how announcements by the opposition and the government can influence the likelihood of rebellion. Results suggest that when the government's credibility is high, the opposition can do little to inspire rebellions; however, a small loss of credibility, if capitalized on by the opposition, markedly boosts the chances of a rebellion. When the public's underlying preferences are polarized, the likelihood of a rebellion drops sharply.

Some scholars suggest that the Middle East's oil wealth helps explain its failure to democratize. This article examines three aspects of this “oil impedes democracy” claim. First, is it true? Does oil have a consistendy antidemocratic effect on states, once other factors are accounted for? Second, can this claim be generalized? Is it true only in the Middle East or elsewhere as well? Is it true for other types of mineral wealth and other types of commodity wealth or only for oil? Finally, if oil does have antidemocratic properties, what is the causal mechanism?

The author uses pooled time-series cross-national data from 113 states between 1971 and 1997 to show that oil exports are strongly associated with authoritarian rule; that this effect is not limited to the Middle East; and that other types of mineral exports have a similar antidemocratic effect, while other types of commodity exports do not.

The author also tests three explanations for this pattern: a “rentier effect,” which suggests that resource-rich governments use low tax rates and patronage to dampen democratic pressures; a “repression effect,” which holds that resource wealth enables governments to strengthen their internal security forces and hence repress popular movements; and a “modernization effect,” which implies that growth that is based on the export of oil and minerals will fail to bring about die social and cultural changes that tend to produce democratic government. He finds at least limited support for all three effects.

How does a state's natural resource wealth influence its economic development? For the past fifty years, versions of this question have been explored by both economists and political scientists. New research suggests that resource wealth tends to harm economic growth, yet there is little agreement on why this occurs. This article reviews a wide range of recent attempts in both economics and political science to explain the “resource curse.” It suggests that much has been learned about the economic problems of resource exporters but less is known about their political problems. The disparity between strong findings on economic matters and weak findings on political ones partly reflects the failure of political scientists to carefully test their own theories.

This article considers the debate over the “resource curse” (i.e., whether too much natural-resource wealth is harmful for developing countries) along with the debate about the mechanisms and conditions that likely generate the reported problems. After reviewing the literature on the resource curse, this article discusses the ways that scholars define “natural resources.” It then analyzes research on how resource wealth affects democracy, the quality of government institutions, and the incidence of violent conflict. It cites evidence showing that petroleum wealth, in particular, seems to have at least three harmful effects: to make authoritarian regimes more durable, to increase certain types of corruption, and to foster the onset of violent conflict in low- and middle-income countries, particularly when this form of mineral wealth is found in the territory of marginalized ethnic groups.

Oil-rich countries have civil wars at significantly higher rates than oil-poor countries. While other studies have demonstrated this pattern at a global level, this chapter demonstrates that it is equally valid in the Latin American and Caribbean (LAC) region. It also describes one important anomaly. In the LAC region, oil is only linked to government conflicts, while in the rest of the world, oil heightens the danger of both government conflicts (in which rebels fight for control of the central government) and secessionist conflicts (in which they fight for a sovereign state). This is not because the region produces petroleum with unusual properties, but because it is uniquely “secession-proof.” Lessons about conflict prevention in oil-producing states developed at a global level are also valid for the LAC region.

High-value resources such as oil and minerals are often unequally distributed within countries. When the distribution happens to coincide with ethnic, religious, or other divisions between groups, real or perceived inequality—known as horizontal inequality—may result, creating potential grounds for grievances. In Niger, for example, mineral revenues are siphoned to the capital, and little is invested in the region from which the revenues originate. This practice has created grievances among the Tuareg, the nomadic people whose ancestral lands encompass the mining areas. In other cases, the “aggrieved” parties are privileged groups. For example, Santa Cruz Department—one of the wealthiest states in Bolivia—has sought greater autonomy, out of a growing reluctance to share gas revenues with the poorer states. Unsurprisingly, many resource-rich countries are plagued by secessionist movements pursuing a radical approach to decreasing (or increasing) horizontal inequality.

The relationship between oil producers and oil consumers has had a history as long as the industry itself. Thus, producers create supply and consumers create demand. In the early years before the oil shocks of the 1970s, the consumers were effectively represented by the major international oil companies the socalled Seven Sisters. These companies, five American, one British and one Anglo-Dutch were seen by the producer countries both governments and people as representatives of the colonial powers. It was the producer governments who first presented a united front in the form of the Organization of Petroleum Exporting Countries (OPEC) created in 1960. The invasion by Iraq of Kuwait in August 1990 triggered a revival of producer-consumer dialogue and yet again it was the threat of price shocks that encouraged the revival of dialogue. However, the events of 1998–99 had disturbed the producers, and the idea of co-operation with consumers gained a certain amount of traction.

What should governments in mineral- rich states do about the gap between rich and poor populations (vertical inequality), and the gap between mineral- rich and mineral- poor regions (horizontal inequality)? This chapter looks at how mineral wealth can affect vertical and horizontal inequality, and what governments can do about it. It also explores the advantages and disadvantages of the decentralization of mineral revenues, and offers a series of guidelines for states that seek to better manage the distributional problems caused by mineral booms.

Many oil-rich countries have authoritarian governments. How will these governments be affected by a global transition away from fossil fuels? We use new, detailed oil data and an event-study design to analyze political change in 36 oil-producing countries that experienced at least 10 years of declining production. We find that when their production starts to decline, they become significantly more democratic, relative to both the overall sample trend and the parallel pre-peak trends. Ten years after their oil peak, 33 of the 36 countries had become more democratic. After 15 years, their relative democracy scores increased by an average of 9 percentage points. For countries that transitioned after 1980, these scores rose about 13 percentage points, and for larger producers, by about 20 percentage points. Our findings suggest that a global transition toward renewable energy may make the governments of oil-rich countries significantly more democratic.

All governments either tax or subsidize the consumption of fossil fuels. These pricing policies have far-reaching consequences not only for the environment, but also for governance and economic development. In this state-of-knowledge paper, we examine previous research on fossil fuel subsidies, noting areas that are understudied in the context of determinants of price policies and causes for policy reform. We then describe new data on implicit gasoline taxes and subsidies, report global trends, and explore the relationship between oil wealth and government policies. We conclude with actionable ideas for future research projects.

The price of gasoline varies from country to country by almost two orders of magnitude, largely because of differences in government taxes and subsidies. Retail gasoline prices have far-reaching economic and environmental consequences but the reasons why they vary–and why countries sometimes enact reforms–are not well-understood. One reason is that data on fuel prices for every country have not previously been available below the annual level. We introduce a new dataset on retail gasoline prices at the monthly level for 157 countries, and use it to compute four measures useful in analyses of pricing policy. Among other descriptive observations, we find that from 2000 to 2012 there were two broad trends: toward reduced ad valorem gasoline taxes in almost all countries, and toward passing global prices on to local consumers. We also find that the only countries with significant subsidies are oil exporters, although not all oil exporters had subsidies. Finally, we report preliminary findings on cross-sectional and temporal variation in measures including price fixity and the degree to which countries pass global prices on to consumers.

The recent political upheavals in the Middle East and North Africa region have exposed growing concerns about conflict risk, political stability, and reform prospects across its societies. Given the prevalence of oil and gas resource endowments in the region, which a voluminous literature suggests can be associated with adverse development consequences, this paper examines the interplay between their associated rents and political economy trajectories. The contribution of the paper is threefold: first, to examine the quantitative evidence of violent conflict in the region since 1960; second, to provide a nuanced review of the regional case study literature on the relationship between resource endowments, political stability, and conflict risk; and third, to assess how prospective political transitions have implications for the World Bank Group’s work in the region on public sector management and private sector development. The authors find that resources and regimes have intersected to provide stability and limited violent conflict in the region, but that these development patterns have yielded a set of policy choices and development patterns that are proving increasingly brittle and unsustainable. A major institutional challenge for reforms will be to consolidate a requisite degree of intertemporal credibility and stability in these regimes, while expanding inclusiveness in state-society relations.

How does a country’s mineral wealth affect the transparency of the government’s budget? Among democracies, a country’s mineral wealth is not convincingly related to the transparency of its government. But among autocracies, greater oil wealth is correlated with less fiscal transparency, while greater non-fuel mineral wealth is paradoxically associated with greater transparency. Explaining this pattern is a challenge: there is no prima facie evidence that it is driven by either membership in the Extractive Industries Transparency Initiative, or by the need to attract foreign investment. There is some evidence that among autocracies, oil reduces transparency because it helps dictators stay in power.

In Africa, Asia, and the Middle East, oil-producing countries have civil wars at a significantly higher rate than countries without oil. Is there also a link between oil and armed rebellion in Latin America? I argue the answer is “yes,” but with an important qualification. In the rest of the world, oil heightens the danger of both “governmental” conflicts (over control of the existing state) and secessionist conflicts (to form new states); but in Latin America, oil is only linked to governmental conflicts. This is not because Latin American petroleum has unusual properties, but because the region is uniquely “secession-proof”: there have been no separatist conflicts in Latin America for over a century. I explore two possible explanations for this anomaly: the region’s long history of sovereign statehood, which may have caused national borders to become more widely-accepted; and obstacles to the mobilization of indigenous groups along ethnic lines.

Recent studies have disputed the claim that ‘oil hinders democracy,’ or raised questions about the causal mechanisms behind it. I re-examine this question, using an improved measure of petroleum wealth, and a dataset that covers all countries from 1960 to 2002. I also explore other types of evidence on oil and authoritarian rule, including data on public opinion and gasoline prices. The results suggest a) oil wealth strongly inhibits democratic transitions in authoritarian states; b) oil’s anti-democratic effects seem to vary over time and across regions: they have grown stronger over time, but do not hold in Latin America; and c) there is little support for most of the alleged causal mechanisms, including two of the three mechanisms suggested by Ross [2001].

Many of Africa’s mineral-rich states have suffered from civil wars and state failure. I argue that one reason for these catastrophes is the ability of combatants to raise funds by selling what might be called “booty futures” – exploitation rights to natural resources that they hope to capture in battle. I argue that the sale of booty futures is an unusually dangerous form of finance, because it tends to favor the weaker party in a conflict – either a nascent insurgency, or a government on the verge of losing a civil war. It can hence contribute to both the onset and the duration of civil wars. This paper describes the booty futures mechanism, and illustrates it with case studies of recent conflicts in Angola, Liberia, Sierra Leone, Congo-Brazzaville, the Democratic Republic of Congo, and the March 2004 attempted coup in Equatorial Guinea.

I discuss two policy questions about the distribution of oil and gas revenues. First, what is the best way for governments to manage their petroleum revenues: through a specialized fund; through federal arrangements that divide revenues or taxes among levels of governments; through a “direct distribution” scheme; or simply through general revenues? Second, how can any of these revenue-distribution arrangements be made institutionally, and intertemporally, stable? Following a highly selective discussion of each issue, I conclude by suggesting there is little prima facie evidence for optimism about any of these approaches. I also suggest that regardless of the institution, intertemporal stability is important, rarely achieved except in monarchies, and may be inadvertently undermined by reform efforts. I conclude by arguing that it would be foolish to recommend any single, one-sizefits-all solution for the distributive problems that petroleum exporters face. As a secondbest alternative, I recommend the adoption of general guidelines; the encouragement of innovation at the national level, based on these guidelines; and the establishment of an international system of performance-based ratings to encourage the adoption of better – if not best – practices.

Of all the states hit by the 1997-98 Asian economic crisis, Indonesia has suffered the most, and been the hardest case for economists to explain. This paper suggests that Indonesia ’s collapse was not unique, but part of a small class of economic catastrophes caused by the interaction of two factors: personalistic authoritarian rule and financial openness. It argues that the combination of these two factors tends to produce economic collapse when investors believe the regime will soon end. To test the argument it develops an index of 45 personalistic regimes that ended between 1974 and 1999, ranks them according to an original index of financial openness, and examines their growth records during their final four years in office. It finds that those regimes that combined personalistic features with financial openness tended to suffer from unusually sharp economic reversals in their final two years. To illustrate the argument it uses the case of Indonesia, showing that investor panic was closely linked to rumors that Suharto was ill or would step down. By themselves, personalistic rule and financial openness are each compatible with high growth rates. When combined, however, they create the preconditions for a calamitous economic reversal.