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Oil Rents, Corruption, and State Stability: Evidence From Panel Data Regressions

Author/Editor: Arezki, Rabah | Brückner, Markus
Authorized for Distribution: December 1, 2009
Electronic Access: Free Full Text (PDF file size is 1,029KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: We examine the effects of oil rents on corruption and state stability exploiting the exogenous within-country variation of a new measure of oil rents for a panel of 31 oil-exporting countries during the period 1992 to 2005. We find that an increase in oil rents significantly increases corruption, significantly deteriorates political rights while at the same time leading to a significant improvement in civil liberties. We argue that these findings can be explained by the political elite having an incentive to extend civil liberties but reduce political rights in the presence of oil windfalls to evade redistribution and conflict. We support our argument documenting that there is a significant effect of oil rents on corruption in countries with a high share of state participation in oil production while no such link exists in countries where state participation in oil production is low.
 
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Series: Working Paper No. 09/267
Subject(s): Corruption | Economic models | Fiscal policy | Fiscal transparency | Governance | Oil exporting countries | Oil production | Oil revenues | Political economy | Public enterprises
Author's keyword(s): Oil rents; corruption; state stability; state participation
 
English  
    Published:   December 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009267   Pages:   28
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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