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Oil, Revenue, and Regime Stability:
The Political Resource Curse Reexamined
What is so peculiar about oil? The association of oil with authoritarian regimes
has been the focus of a large case-study literature (e.g. Beblawi and Luciani 1987b;
Chaudhry 1997; Karl 1997), as well as recent statistical work on cross-national time-
series datasets (Ross 2001; Smith 2004). Overall, there seems to be something going on,
but after so much work, we still remain unclear as to the mechanisms by which oil affects
political regimes. The confusion is illustrated by the fact that the two most rigorous
statistical analyses—by Ross (2001) and Smith (2004)—come to different conclusions
about oil. Ross (2001) argues that oil leads to authoritarianism, and by implication is
destabilizing for democratic regimes. Smith (2004) argues that oil leads to regime
stability, implying that oil wealth would stabilize democracies. These empirical
differences are evidence of a broader problem: a lack of theoretical underpinning for the
effects of oil wealth in different regimes.
The causal mechanisms between oil and democratic transition (or lack thereof)
have varied in the literature. The central argument, however, is that oil revenues provide
central governments with discretionary income that can be used to buttress their political
position, protecting them for pressures for democratic transition. As Jensen and
Wantchekon state, “The key mechanism linking authoritarian rule and resource
dependence, both in democratic transition and democratic consolidation, is the
incumbent’s discretion over the distribution of natural resources” (2004, 821). Similarly,
Smith notes, “While scholars approach the political economy of oil from diverse
methodological origins, the theoretical arguments about the structures and nature of the
Convention