Oil Windfalls and a Conditional Political Resource Curse

• In Event: The Micro-level Politics of the Resource Curse

Abstract

Do natural resource windfalls affect democratic outcomes? We argue that the effect of such revenues on democratic outcomes is conditioned by the strength of political institutions. Where institutions are weak, natural resource revenues are diverted towards clientelistic practices, which increase incumbent reelection rates. Where institutions are strong, we expect no such effect. To test this theory, we exploit a natural experiment in Brazil by which municipalities are allocated offshore oil royalties as-if randomly. We confirm that oil resources boost incumbent reelection rates where institutions are weak. We trace the mechanisms through which reelection rates increase: in municipalities with poor institutions, incumbents use resources to increase public employment, spending on administration, election campaign expenditures, and turnout rates. Together, these clientelistic practices increase incumbent reelection rates. Our argument provides a possible principled way in which to reconcile the divergent findings of the political resource curse literature.

Authors

• Rikhil R. Bhavnani, University of Wisconsin, Madison

• Noam Lupu, Vanderbilt University