De-Industrialization

A 2018 study in the Economic Journal found that "oil price shocks are seen to promote
coups in onshore-intensive oil countries, while preventing them in offshore-intensive oil
countries." The study argues that states which have onshore oil wealth tend to build up
their military to protect the oil, whereas states do not do that for offshore oil wealth.
Democracy
Research shows that oil wealth lowers levels of democracy and strengthens autocratic
rule. According to Michael Ross, "only one type of resource has been consistently
correlated with less democracy and worse institutions: petroleum, which is the key
variable in the vast majority of the studies that identify some type of curse." A 2014
meta-analysis confirms the negative impact of oil wealth on democratization. A 2016
study challenges the conventional academic wisdom on the relationship between oil and
authoritarianism. Another 2016 study finds that resource windfalls have no political
impact on democracies and deeply entrenched authoritarian regimes, but significantly
exacerbate the autocratic nature of moderately authoritarian regimes. A third 2016 study
finds that while it is accurate that resource richness has an adverse impact on the
prospects of democracy, this relationship has only held since the 1970s. A 2017 study
found that the presence of multinational oil companies increases the likelihood of state
repression. Another 2017 study found that the presence of oil reduced the likelihood
that a democracy would be established after the breakdown of an authoritarian
regime. A 2018 study found that the relationship between oil and authoritarianism
primarily holds after the end of the Cold War; the study argues that without American or
Soviet support, resource-poor authoritarian regimes had to democratize while resourcerich
authoritarian regimes were able to resist domestic pressures to democratize.
There are two ways that oil wealth might negatively affect democratization. The first is
that oil strengthens authoritarian regimes, making transitions to democracy less
likely. The second is that oil wealth weakens democracies. Research generally supports
the first theory but is mixed on the second.
Both pathways might result from the ability of oil-rich states to provide citizens with a
combination of generous benefits and low taxes. In many economies that are not
resource-dependent, governments tax citizens, who demand efficient and
responsive government in return. This bargain establishes a political relationship
between rulers and subjects. In countries whose economies are dominated by natural
resources, however, rulers don't need to tax their citizens because they have a
guaranteed source of income from natural resources. Because the country's citizens
aren't being taxed, they have less incentive to be watchful with how government spends
its money. In addition, those benefiting from mineral resource wealth may perceive an
effective and watchful civil service and civil society as a threat to the benefits that they
enjoy, and they may take steps to thwart them. As a result, citizens are often poorly
served by their rulers, and if the citizens complain, money from the natural resources
enables governments to pay for armed forces to keep the citizens in check. It has been
argued rises and falls in the price of petroleum correlate with rises and falls in the
implementation of human rights in major oil-producing countries.
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