Centre for the Study of African Economies

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

2. 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 Centre for the Study of African Economies

3. ‘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 Centre for the Study of African Economies

4. Centre for the Study of African Economies

5. 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 Centre for the Study of African Economies

6. Mechanisms that undermine thebenefits 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 Centre for the Study of African Economies

7. 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 Centre for the Study of African Economies

8. 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) Centre for the Study of African Economies

9. Democracy Scores Centre for the Study of African Economies

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

11. Growth, Democracy and Natural Resource Rents Centre for the Study of African Economies

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

13. 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 Centre for the Study of African Economies

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

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

16. Table 1: How many Elections are Contested by Incumbents? Centre for the Study of African Economies

17. Table 2: How many Elections are Won by Incumbents? Centre for the Study of African Economies

18. Table 3: How do Incumbents Win Elections? Centre for the Study of African Economies

19. Table 5: What Determines Clean Elections? Centre for the Study of African Economies

20. Bibliography AcemogluD., S. Johnson and J. Robinson, 2001. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91: 1369-1401. BarroR., 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. PerssonT. 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. WantchekonL., 1999. Why Do Resource Abundant Countries Have Authoritarian Governements? Yale University Leitner Center Working Paper 99-12. Centre for the Study of African Economies