1. Centre for the Study of African Economies Democracy and Development Anke Hoeffler Centre for the Study of African Economies Department of Economics, University of Oxford

2. Centre for the Study of African Economies Testing the Neocon Agenda: Democracy in Resource-Rich Societies Paul Collier and Anke Hoeffler Centre for the Study of African Economies Department of Economics, University of Oxford

3. Centre for the Study of African Economies ‘ Neocon Agenda’ using ‘American Power to reshape the global environment in the name of a set of liberal democratic ideals. It is their belief that this will make the United States more secure by reducing the seemingly intractable problems of the Middle East, thus getting at some of the root causes of terrorism.’ Selden (2004), Hoover Institution Policy Review

4. Centre for the Study of African Economies growth natural resources democracy

5. Centre for the Study of African Economies Effect of Resources on Economic Consequences of Democracy Is democracy more or less beneficial in resource rich societies? Long run: democracy endogenous to resource rents

6. Centre for the Study of African Economies Mechanisms that undermine the benefits of democracy Public goods – Patronage goods In a well functioning polity: patronage goods result in electoral defeat and prosecution – Restraints Model: provision of patronage goods s.t. to constraints and how these constraints are affected by natural resources

7. Centre for the Study of African Economies Model Checks&balances prevent diversion into patronage (more public goods) Constraints: Taxation results in more scrutiny Patronage is a function of government revenue and embezzlement Embezzlement rate depends on taxation

8. Centre for the Study of African Economies Model plus natural resources Natural resources relax the constraint (less taxation) Patronage is higher, due to less scrutiny not due to higher revenue Embezzlement – natural resources (high/low)

9. Centre for the Study of African Economies Democracy Scores PeriodSampleHigh Natural Rents Countries 1970-19984.031.46 19703.290.96 19743.080.89 19783.181.32 19823.431.76 19863.721.28 19904.521.89 19945.292.00 19985.261.92

10. Centre for the Study of African Economies Democracy and Checks and Balances

11. Centre for the Study of African Economies Growth, Democracy and Natural Resource Rents (1)(2)(7) ln GDP -0.045-0.130-0.219 (0.702)(0.284)(0.104) Nat. Resources -0.027-0.013 (0.154)(0.572) Democracy 0.0890.1310.145 (0.036)**(0.005)***(0.002)*** NatRes·Dem -0.007-0.020 (0.096)*(0.002)*** NatRes t-1 -0.051 (0.042)** NatRes·Checks 0.033 (0.033)** Observations 858 720 R2R2 0.1380.1420.159

12. Centre for the Study of African Economies Results democratic countries have higher growth interaction between resource rents and democracy is negative interaction between resource rents and checks is positive

13. Centre for the Study of African Economies Conclusion a priori the effect of natural resources on the economic consequences of democracy is ambiguous Distinction: electoral competition - checks&balances Resource rents unleash patronage politics Resource rents undermine checks&balances Checks&balances are a public good, undersupplied Neocon agenda has to be scaled up or down

14. Centre for the Study of African Economies Democracy’s Achilles Heel or, How to Win an Election without Really Trying Paul Collier and Anke Hoeffler Centre for the Study of African Economies Department of Economics, University of Oxford

15. Centre for the Study of African Economies Leader’s Choices Election Strategy Economic Policy Rents R Growth g Licit tactics Win depends on growth Illicit tactics – penalty P Win assured

16. Centre for the Study of African Economies Dirty ElectionsClean ElectionsTotal Incumbent did not stand 73155228 (29%) Incumbent election251307558 (71%) Total324 (41%)462 (59%)786 Table 1: How many Elections are Contested by Incumbents?

17. Centre for the Study of African Economies Dirty ElectionClean ElectionTotal Incumbent loses48132180 (43%) Incumbent wins203175378 (57%) Total251 (19%)307 (81%)558 Table 2: How many Elections are Won by Incumbents?

18. Centre for the Study of African Economies (4) Core Model(5) (6) Dirty Elections Only (7) Clean Elections only Democracy wave-0.552 (2.47)** -0.727 (2.91)***-0.596 (1.36)-0.682 (2.37)** S.S. Africa 1.227 (3.19)***1.222 (3.22)***0.930 (1.87)*1.392 (2.07)** Sec. Enrolment 0.015 (3.15)***0.022 (4.02)***0.027 (2.31)**0.017 (2.96)*** Growth 0.078 (3.03)***0.090 (3.39)***0.083 (2.17)**0.105 (2.42)** Pop. growth 0.194 (1.47)0.190 (1.46)0.292 (1.49)0.198 (1.09) Clean election -1.189 (4.36)*** -0.647 (2.12)** Press freedom -0.780 (3.86)***-1.351 (4.71)***-0.336 (1.21) Observations530477205272 Pseudo R 2 0.100.130.190.06 Log Likelihood-300.27-261.73-83.32-173.90 Table 3: How do Incumbents Win Elections?

19. Centre for the Study of African Economies (3)(4)(5)(6) Democracy Wave0.569(2.03)**0.672(1.80)*0.384(0.86)0.668(1.64)0.689(1.88)* ln Population0.271(2.58)***0.213(1.49)0.259(1.81)*0.175(1.19)0.198(1.35) Ln GDP(t-1)0.568(3.87)***0.626(3.15)***0.343(1.90)*0.920(5.04)***0.563(2.83)*** Resource-0.065(3.44)***-0.096(3.05)***0.014(0.39)-0.132(3.06)***-0.095(3.09)*** Checks1.104(7.62)***1.265(6.39)***0.921(4.25)***1.133(5.70)***1.253(6.14)*** Pressfreedom1.059(4.19)***0.996(3.04)***1.391(3.34)***0.800(2.35)**0.902(2.82)*** Termlimits-1.669(1.14) Rents*terml0.352(2.15)** Illegal Entry-1.098(1.66)* Observations627439188380439 PseudoR20.570.650.380.66 Log Likelihood-177.81-102.77-69.28-81.93-101.36 Table 5: What Determines Clean Elections?

20. Centre for the Study of African Economies Bibliography Acemoglu D., S. Johnson and J. Robinson, 2001. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91: 1369-1401. Barro R., 1999. Determinants of Democracy. Journal of Political Economy 107(6): S158-S182. Besley T. and T. Persson, 2009. The Origins of State Capacity: Property Rights, Taxation and Politics. American Economic Review. Forthcoming. Chauvet L. and P. Collier, 2009. Elections and Economic Policy in Developing Countries, Economic Policy. Forthcoming. Collier, P. 2009. Wars, Coups and Votes: Democracy in Dangerous Places. Bodley Head. Collier P. and A. Hoeffler, 2009. Democracy’s Achilles Heel or, How to Win an Election without Really Trying, CSAE mimeo. Collier P. and A. Hoeffler, 2009. Testing the Neocon Agenda: Democracy in Resource-Rich Societies. European Economic Review. Collier P., 2009. The Political Economy of Failing States. Oxford Review of Economic Policy. Forthcoming. Diamond, L. 2002. Thinking About Hybrid Regimes. Journal of Democracy 13: 21-36. Hall R. E. and C. I. Jones, 1999. Why Do Some Countries Produce So Much More Output per Worker than Others? Quarterly Journal of Economics 114(1): 83-116. Jensen N. and L. Wantchekon, 2004. Resource Wealth and Political Regimes in Africa. Comparative Political Studies 37(4), 816-841. Knack S. and P. Keefer, 1995. Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures. Economics and Politics 7(3): 207-228. Keefer P., 2005. Democratization and Clientelism: Why Are Young Democracies Badly Governed? World Bank Policy Research Paper 3594. Persson T. and G. Tabellini, 2003. The Economic Effects of Constitutions, MIT Press. Przeworski A. and F. Limongi, 1997. Modernization: Theories and Facts. World Politics 49(2): 155-183. Robinson J.A., 2006. Economic Development and Democracy. Annual Review of Political Science 9: 503-527. Robinson J. A., R. Torvik and Verdier T., 2006. Political foundations of the resource curse. Journal of Development Economics 79, 447-468. Ross M. L., 2001. Does Oil Hinder Democracy? World Politics 53, 325-361. Wantchekon L., 1999. Why Do Resource Abundant Countries Have Authoritarian Governements? Yale University Leitner Center Working Paper 99-12.