Document Type

Article

Publication Date

7-2012

Abstract

Much research has gone into the effects of oil and other natural resources on growth in which political institutions are often seen as the link between the two. Since institutions are difficult to measure and change very slowly over time, the analysis has largely been confined to cross-country comparisons, most frequently investigating the effects on levels of democracy. This paper builds on recent analyses of the effects of oil endowments, prices and exports on democracy to examine the effects on several different types of institutional change, making use of panel data on over 100 countries between 1975 and 2005 wherever possible. The results distinguish between three characteristics of oil endowments which may also serve as channels through which their effects on the different institutions are realized. These include wealth, experience in the industry, and rents per unit of the resource exploited and reveal some findings which seem to depart sharply from conventional ones. Above all, they indicate the diversity in effects of oil on institutional change from one institution to another as well as according to the timing of the industry’s development and the magnitude of the endowment in each individual country.