Oil and Democracy: Endogenous Natural Resources and the Political “Resource Curse”

By the end of the twentieth century, a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth. The natural abundance once thought to be a blessing was unconditionally, and then later only conditionally, a curse for political and economic development. We re-examine the relationship between oil wealth and political regimes, challenging the conventional wisdom that such natural resource rents lead to authoritarian outcomes. We contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself, particularly in its developmentalist form. Our quantitative results, based on an analysis of global data from 1970 to 2006, show that both resource endogeneity and several mechanisms of intraregional regime diffusion are powerful determinants of democratic outcomes. Qualitative evidence from the history of industrialization in Latin America yields support for our proposed causal claim. Oil wealth is not necessarily a curse and may even be a blessing with respect to democratic development.