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More Oil, Less Democracy: Evidence from Worldwide Crude Oil Discoveries

Authors


  •  Special thanks to Colin Campbell from the Association for the Study of Peak Oil and Fredrik Robelius for providing access to some of the data and institutional details of the oil industry. I am grateful to three anonymous referees and editor David Myatt for their constructive suggestions. I am also grateful to Gary Becker, Casey Mulligan and Lester Telser for their advice as well as Jayco Fung for her encouragement. Finally, I also thank Dan Benjamin, Dan Black, Anca Cotet, Bill Dougan, David Gordon, Steve Levitt, Kevin Murphy, Derek Neal, Ivan Png, Jesse Shapiro, Robert Tamura, Lei Zhang, seminar participants at the University of California at Berkeley, University of Chicago, Clemson University, University of Maryland, Syracuse University and, especially, Chris Rohlfs for helpful comments and discussions. All remaining errors are mine.

Abstract

This article exploits variations in the timing and size of oil discoveries to identify the impact of oil wealth on democracy. I find that discovering 100 billion barrels of oil (approximately the initial endowment of Iraq) pushes a country's democracy level almost 20 percentage points below trend after three decades. The estimated effect is larger for oilfields with higher-quality oil and lower exploration and extraction costs. However, the estimates become less precise when oil abundance is measured by oil discovery per capita, suggesting politicians may care about the level instead of the per capita value of oil wealth.

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