Monday, May 30, 2011

Oil wealth and democracy

The recent study by Kevin K. Tsui (link) shed some important implications of the relationship between oil wealth and democratic governance. It is a well argued fact that major discoveries of oil hindered rather than encouraged the political transition of less developed and developing countries into well-functioning, stable and mature democracies.

Although oil-rich countries tend to favor political dictatorship, Norway, U.S. and Canada are proven exceptions to this particular pattern mainly because of the evolution of institutional stability safeguarding contract enforcement while imposing strict limits on the executive branch of government. On the other hand, oil-rich non-democratic countries, such as Libya, Jordan and Saudi Arabia may enjoy longer longevity and higher income per capita but, in the long run, the pressure for freedom of the press and greater civil liberties may sooner or later undermine the political power of seemingly untouchable dictatorships. This particular hypothesis can explain recent uprisings across the Arab world.

By and large, the lesson from revolutions in Tunisia, Egypt, Libya and other Arab states is that once oil wealth leads to the improvment of infrastructure, life expectancy and standard of living, the call for political liberties and stronger civil society is irreversible, which can undermine even the most robust dictators.

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