The economics of petro-authoritarianism: Post-soviet transitions and democratization

Abstract

The sharp decline in oil prices in the second half of 2014 drew attention to petro-authoritarian regimes. Crackdowns on civil societies across oil-rich nations of the post-Soviet space, and especially the aggressive behavior of the Russian government, restored academic interest in the oil-hinders-democracy hypothesis of Ross (2001). However, some recent studies challenge the hypothesis and suggest that previous articles might need to be revised to avoid endogeneity and not control the heterogeneous initial institutional quality. To address these issues, we use an instrumental variable approach and employ the Synthetic Control Method (SCM) to test the impact of oil income on democracy in post-Soviet countries. The analyzed sample enables us to control the initial institutional quality and treat oil resources as a quasi-random assignment. Our empirical findings suggest that oil still impedes democracy.