Energy its relationship to dutch disease resource curse governance and democracy
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Energy: Its Relationship to Dutch Disease, Resource Curse, Governance and Democracy. 18 Nov 09. Background. Resource rich countries develop slower than resource poor countries Dutch Disease Resource rich countries tend to be more authoritarian, violent and corrupt Resource Curse

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Energy its relationship to dutch disease resource curse governance and democracy

Energy: Its Relationship to Dutch Disease, Resource Curse, Governance and Democracy

18 Nov 09


Background

Background

  • Resource rich countries develop slower than resource poor countries

    • Dutch Disease

  • Resource rich countries tend to be more authoritarian, violent and corrupt

    • Resource Curse

  • Is there a link between resource abundance and lack of democracy?


Energy its relationship to dutch disease resource curse governance and democracy

Source: Energy Information Administration


Energy its relationship to dutch disease resource curse governance and democracy

Source: Nation Master


Energy its relationship to dutch disease resource curse governance and democracy

Saudi Arabia

Nigeria

UAE

Kuwait

Iran

Norway

Algeria

Venezuela

Iraq

Kazakhstan

Qatar

Canada

Sources: Energy Information Administration & Nation Master


Energy its relationship to dutch disease resource curse governance and democracy

Source: Energy Information Administration


Energy its relationship to dutch disease resource curse governance and democracy

GDP ($B)Oil Revenues ($B)

61.6%

14.5%

54.5%

21.3%

71.4%

16.4%

81.5%

18%

33%

39.7%

60%

30%

2.7%

46%

Sources: World Bank & Energy Information Administration


Does oil hinder democracy

Does Oil Hinder Democracy?

  • Rentier Effect

    • Taxation Effect

    • Spending Effect

    • Group Formation Effect

  • Repression Effect

  • Modernization Effect

    • Dutch Disease and Resource Curse = Lower Growth


Dutch disease

Dutch Disease

  • Symptoms:

    • Natural Resource Boom = Deindustrialization

      • Resource Movement Effect

      • Spending Effect

    • Rise in exchange rate = decreased competitiveness

      • Protectionist Policy

  • Remedies

    • Sovereign Wealth Funds

    • Fiscal Policy


Resource curse

Resource Curse

  • Symptoms

    • Lower Growth Rate

    • Increased Conflict

    • Poor political relationship between Rulers and Citizens

    • Volatility of Revenues

    • Corruption

    • Lack of Diversification

  • Remedies

    • Direct Distribution of Oil Revenues which are then taxed


Pros and cons

Pros and Cons

  • Plus:

    • Generous social services

    • Strong growth during boom times

  • Minus:

    • Government Fiscal Powers dampen pressure for democracy

    • Conflict and stronger security forces to ward off democratic pressures

    • Lack of occupational specialization and economic diversity


Energy its relationship to dutch disease resource curse governance and democracy

Total Tax Revenues as % of GDP vs % of Tax Revenues from Oil(2008)

Norway

Russia

Canada

Total Tax Revenues as % of GDP

Venezuela

Algeria

Nigeria

Iran

Saudi Arabia

Angola

Libya

UAE

Kuwait

% of Tax Revenues from Oil

Sources: OECD & Economist


Energy its relationship to dutch disease resource curse governance and democracy

Taxes vs Democracy(2008)

Norway

Russia

Canada

Total Tax Revenues as % of GDP

Kazakhstan

Venezuela

Algeria

Iran

Saudi Arabia

Nigeria

Angola

Qatar

Libya

Kuwait

UAE

Democracy Index Score

Sources: OECD & Economist


Energy its relationship to dutch disease resource curse governance and democracy

Democracy vs % of Tax Revenues from Oil(2008)

Norway

Canada

Democracy Index Score

Venezuela

Iraq

Russia

Kuwait

Nigeria

Algeria

Iran

Angola

UAE

Libya

Saudi Arabia

% of Tax Revenues from Oil

Sources: OECD & Economist


Of gdp from oil vs gdp growth rate 2008

% of GDP from oil vs GDP Growth Rate(2008)

Qatar

Angola

GDP Growth Rate

Kuwait

Iraq

Iran

UAE

Libya

Nigeria

Russia

Venezuela

Saudi Arabia

Algeria

Kazakhstan

Norway

Canada

% of GDP from Oil

Sources: CIA World Fact Book , EIA, and World Bank


Of gdp from oil vs voice and accountability 2008

% of GDP from oil vs Voice and Accountability(2008)

Canada

Norway

Kuwait

Venezuela

Nigeria

Qatar

Russia

UAE

Kazakhstan

Algeria

Angola

Iraq

Iran

Saudi Arabia

Libya

Sources: World Bank and EIA


Of gdp from oil vs political stability 2008

% of GDP from oil vs Political Stability(2008)

Canada

Norway

Qatar

UAE

Kazakhstan

Libya

Kuwait

Angola

Saudi Arabia

Russia

Iran

Algeria

Venezuela

Nigeria

Iraq

Sources: World Bank and EIA


Of gdp from oil vs government effectiveness 2008

% of GDP from oil vs Government Effectiveness(2008)

Canada

Norway

Qatar

UAE

Kuwait

Saudi Arabia

Russia

Kazakhstan

Algeria

Iraq

Angola

Venezuela

Iran

Nigeria

Libya

Sources: World Bank and EIA


Of gdp from oil vs regulatory quality 2008

% of GDP from oil vs Regulatory Quality(2008)

Canada

Norway

Qatar

UAE

Saudi Arabia

Kuwait

Kazakhstan

Russia

Nigeria

Algeria

Angola

Libya

Iraq

Venezuela

Iran

Sources: World Bank and EIA


Of gdp from oil vs rule of law 2008

% of GDP from oil vs Rule of Law(2008)

Norway

Canada

UAE

Qatar

Kuwait

Saudi Arabia

Iran

Russia

Libya

Algeria

Kazakhstan

Angola

Nigeria

Iraq

Venezuela

Sources: World Bank and EIA


Of gdp from oil vs control of corruption 2008

% of GDP from oil vs Control of Corruption(2008)

Canada

Norway

Qatar

UAE

Kuwait

Saudi Arabia

Algeria

Libya

Iran

Russia

Nigeria

Angola

Kazakhstan

Venezuela

Iraq

Sources: World Bank and EIA


Of gdp from oil vs average governance indicator 2008

% of GDP from oil vs Average Governance Indicator(2008)

Canada

Norway

UAE

Qatar

Kuwait

Saudi Arabia

Algeria

Kazakhstan

Russia

Angola

Libya

Nigeria

Iran

Venezuela

Iraq

Sources: World Bank and EIA


Works studied

Works Studied

  • Does Oil Hinder Democracy?

    • by Michael L. Ross

  • Oil, Corruption and the Resource Curse

    • by Nicholas Shaxson

  • Natural Resource Abundance and Economic Growth

    • by Jeffrey D. Sachs and Andrew M. Warner


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