lec10+treisman

greater popular support (Treisman 2009, 2010). At moments of overwhelming popularity, a president has the opportunity to make significant changes to the system, pushing it towards either more or less democracy. President Putin, with an approval rating close to 80 percent, chose the latter. This was not inevitable; had the Kremlin candidate in 2000 been a more committed democrat, one can imagine that the subsequent boom might have helped sustain support for further democratic reforms. At the same time, the price of oil, although important, was not the only determinant of Russia’s growth rate. Studies suggest that higher oil prices explain between one third and one half of the total growth since 1999.22 The impact of oil prices was apparently stronger in 2005-9 than in 1999-2001, when growth was fueled by the effects of devaluation, and 2001-4, when higher output of oil and minerals—mostly achieved by private companies—was at least as important as higher prices. Thus, the path from oil prices to weaker democracy in Russia since 1999 has been somewhat indirect and contingent.

More generally, resource endowments have two effects. First, they may provide rents that, if controlled by the government, can be used for political purposes. Second, dependence on commodity exports subjects countries to sometimes extreme economic gyrations as the prices of commodities are more volatile than those of manufactured products and services (Jacks, O’Rourke, and Williamson 2009). In countries for which the rents are large relative to the volatility, natural resources may enable incumbent rulers to entrench themselves and avoid sharing power. In those for which the volatility is large relative to the rents, the main political consequence of resource dependence is likely to be not so much authoritarianism as instability.

22 Suni (2007) estimates that higher oil prices explain about 2.5 points (38 percent) of the 6.5 percent average growth rate in 2001-06. Beck, Kamps and Mileva (2007), reviewing previous studies, note estimated long-run elasticities of GDP to permanent increases in the oil price of .15 to .20. Using the monthly prices of European Brent oil, these elasticities imply that the change in oil prices in 1999-2007 can explain 25 to 33 points of the 72 percent increase in GDP (measured in constant rubles) between those years—or, in other words, 35 to 46 percent of the total growth.

19

Such instability may not always be bad for democracy. If the instability is moderate, it may help facilitate turnover at the top of the state.23 Turnover does not by itself create democracy, but from alternation of elites democracy can emerge. On the other hand, extreme instability may discredit and incapacitate the state, leading to civil conflict rather than peaceful alternation. From this perspective, the second rank oil producers of Latin America and Asia (Argentina, Mexico, Ecuador, Indonesia, Malaysia) may have a combination of rents and volatility that is consistent with—or even conducive to—democratization, while the major oil producers like Qatar and Brunei have such high rents that the volatility is hardly felt. To the extent this is correct, Russia fits best into the first category, along with Latin American peers like Mexico and Venezuela. Its mineral wealth adds an element of periodic turbulence to its political economy, which will sometimes disrupt—but could at times even catalyze—democratic transition.

23 If dependence is only moderate, however, the incumbents may be able to shield themselves from political instability by saving significant oil revenues in reserve funds—as Russia has done—and using these funds to cushion price shocks. The effectiveness of such a strategy obviously depends on how great is the price volatility and how long the shocks last.

20

References

Acemoglu, Daron, Simon Johnson, James Robinson, and Pierre Yared. 2008. “Income and Democracy,” American Economic Review, 98, 3, 808-842.

Ades, Alberto and Rafael Di Tella. 1999. “Rents, Competition, and Corruption,” American Economic Review, 89, 4, 982-994.

Aslaksen, Silje. 2010. “Oil and Democracy—More than a Cross-Country Correlation?” Journal of Peace Research, forthcoming, http://www.oekonomi.uio.no/ansatte/Div./silje/oil_for%20hompage.pdf.

Barrett, D.B., G.T. Kurian, and T.M. Johnson. 2001. World Christian Encyclopedia, 2nd ed., New York: Oxford University Press.

Beck, Roland, Annette Kamps and Elitza Mileva. 2007. “Long-term Growth Prospects for the Russian Economy,” Frankfurt: European Central Bank.

Cingranelli, David L. and David L. Richards. 2008. Cingranelli-Richards (CIRI) Human Rights Dataset 2008, www.humanrightsdata.org.

Dunning, Thad. 2008. Crude Democracy: Natural Resource Wealth and Political Regimes, New York: Cambridge University Press.

Egorov, Georgy, Sergei Guriev, and Konstantin Sonin. 2009. “Why Resource-Poor Dictators Allow Freer Media: Theory and Evidence from Panel Data,” American Political Science Review, 103, 4, 645-68.

Fish, M. Steven. 2005. Democracy Derailed in Russia: The Failure of Open Politics, New York: Cambridge University Press.

Friedman, Thomas L. 2006. “The First Law of Petropolitics,” Foreign Policy, May-June, 28-36.

Gaddy, Clifford and Barry Ickes. 2005. “Resource Rents and the Russian Economy,” Eurasian Geography and Economics, 46, 8, 559-583.

Gaidar, Yegor. 2007. Collapse of an Empire: Lessons for Modern Russia, Washington, DC: Brookings Institution Press.

Goskomstat RF. 2008. Rossiisky statistichesky yezhegodnik, Moscow: Goskomstat RF.

Guriev, Sergei, Anton Kolotilin, and Konstantin Sonin. 2008. “Determinants of Expropriation in the Oil Sector: A Theory and Evidence from Panel Data,” Moscow: New Economic School.

21

Haber, Stephen and Victor Menaldo. 2009. “Do natural resources fuel authoritarianism? A reappraisal of the Resource Curse,” Stanford: manuscript. https://iriss.stanford.edu/sites/all/files/sshp/docs/Haber%20and%20Menaldo_May%204%20200 9.pdf.

Hanson, Philip. 2009. “The Resistible Rise of State Control in the Russian Oil Industry,”

Eurasian Geography and Economics, 50, 1, 14-27.

Jacks, David S., Kevin H. O'Rourke, and Jeffrey G. Williamson. 2009. “Commodity Price Volatility and World Market Integration since 1700,” NBER Working Paper No. 14748.

Jensen, Nathan and Leonard Wantchekon. 2004. “Resource Wealth and Political Regimes in Africa,” Comparative Political Studies, 37, 9, 816-841.

Jones Luong, Pauline and Erika Weinthal. 2006. “Rethinking the Resource Curse: Ownership Structure, Institutional Capacity, and Domestic Constraints,” Annual Review of Political Science, 9, 241-63.

Kamrava, Mehran. 2009. “Royal Factionalism and Political Liberalization in Qatar,” The Middle East Journal, 63, 3, 401-20.

McPherson, Charles. 2003. National Oil Companies: Evolution, Issues, Outlook, Washington, DC: World Bank.

Naím, Moisés. 2004. “Russia’s Oily Future: Overcoming geology, not ideology, will become Moscow’s greatest challenge,” Foreign Policy, January/February, 94-5.

OECD. 2006. Economic Survey: Russian Federation, Paris: OECD.

OECD. 2009. Economic Survey: Russian Federation, Paris: OECD.

Ross, Michael L. 2001. “Does Oil Hinder Democracy?” World Politics, April, 325-61, at 332-3.

Ross, Michael. 2009. “Oil and democracy revisited,” UCLA: manuscript, www.sscnet.ucla.edu/polisci/faculty/ross.

Rutland, Peter. 2008. “Putin’s Economic Record: Is the Oil Boom Sustainable?” Europe-Asia Studies, 60, 6, 1051-72.

Suni, Paavo. 2007. “Oil Prices and the Russian Economy: Some Simulation Studies with NiGEM,” Helsinki: Research Institute of the Finnish Economy.

Tompson, William. 2005. “A Frozen Venezuela? The ‘Resource Curse’ and Russian Politics,” Paris: OECD.

22

Treisman, Daniel. 2007. “What Have We Learned about the Causes of Corruption from Ten Years of Cross-National Empirical Research?” Annual Review of Political Science, 10, 211-44.

Treisman, Daniel. 2009. “Presidential Popularity in a Young Democracy: Russia under Yeltsin and Putin,” UCLA: manuscript, www.sscnet.ucla.edu/polisci/faculty/treisman/.

Treisman, Daniel. 2010. The Return: Russia’s Journey from Gorbachev to Medvedev, New York: The Free Press, forthcoming.

World Bank. 2009. World Development Indicators, Washington, DC: The World Bank.

23

Table 1. Oil and gas income per capita and democracy (dependent variable is Polity score on 21 point scale, from Polity IV 2009 update)

Sources: Penn World Tables for real GDP per capita (adjusted for purchasing power parity); Polity IV dataset (September 2009 update); Michael Ross dataset on oil and gas income, 2009. Panels include every fifth year from 1960 to 2005. Full set of year fixed effects included in all regresions (results not shown). Full set of country fixed effects included in models 1 9, standard errors clustered by country. Random effects models adjusted for AR(1) process. a p < .10 b p < .05 c p < .01.

24

Table 2. Fuel exports, 2006

Sources: calculated from World Bank (2009).

25

Table 3 Some characteristics of leading oil producers, averages for 2000 08

Source: Adapted from Treisman (2010) data from World Bank (2009).

26