Rentier Economy Research Articles

Industrial Production Networks and Small Towns: A Case Study from Algeria

This paper investigates the conditions and consequences of integrating small towns into industrial production networks. It is based on empirical research conducted in Algeria, a hydrocarbon-dependent rentier economy characterized by significant regional inequalities and the political aims of economic diversification and spatial rebalancing. Elaborating the case study of a state-owned cement factory in the small town of Sigus, the research provides insights into the multiple roles of the state in shaping production network integration and the characteristics of small towns as economic locations. The methodology combines secondary data and information with primary research based on semi-structured interviews. It reveals the importance of a multi-scalar regional framework in production network integration, whereby national factors played a key role due to the centralized Algerian state, the state-owned character of the investing company, and the shortcomings of the small town’s local environment. It emphasizes the contradictory impacts of production network integration in economic, social, and environmental terms, primarily on a local level. These contradictions underscore the necessity for critical evaluations to maximize the benefits of production network integration while mitigating its adverse effects. They also call for the more consistent involvement of the local community in similar economic development decisions. Notably, this research contributes significantly to the existing body of literature by addressing the underexplored topic of integrating small towns into production networks within the Algerian context. Doing so offers a more nuanced understanding of the particular economic, social, and environmental dynamics at play in these locations, thereby enriching the discourse on economic development strategies for small towns in rentier economies like Algeria.

Rethinking diversification: Assessing the impact of energy concentration on climate change in rentier and non-rentier countries

Energy diversification, a critical strategy for environmental protection, has been surprisingly understudied in academic discourse. This paper seeks to address this gap by investigating the relationship between energy diversification and climate change in 76 countries from 1990 to 2020. We employ panel data techniques, and the system generalized method of moments (SYS-GMM) to analyze the impact of energy diversification, as measured by the Herfindahl-Hirschman Index, on CO2 emissions. Additionally, control variables such as economic growth, trade openness, foreign direct investment, information and technology adoption, natural resource rents, and urbanization are included in the model. The analysis is re-estimated for various country groupings based on income level and resource dependence (rentier vs. non-rentier). The findings reveal a significant positive association between energy concentration and CO2 emissions across all country groups, with the most pronounced impact is observed in middle-income, resource-rich economies (i.e., middle-income rentiers). The study also highlights differing effects of diversification on CO2 emissions between high-income and middle-income nations, which reflects the prevalence of non-rentier economies among high-income countries and rentier economies in middle-income countries. The causal relationship between CO2 emissions and energy diversification in different groups of countries is tested using the panel Granger causality test. The results reveal strong bidirectional causality between CO2 emissions and energy diversification in all country groups analyzed, except for middle-income rentier countries. By elucidating the multifaceted relationship between energy diversification and climate change, this study aims to provide valuable policy recommendations to advance sustainable development and environmental management.

Alternative energy and its impact on the rentier economy of Iraq as a model

Alternative energy and its impact on the rentier economy of Iraq as a model

The impact of external shocks on economic development in Iraq for the period 1980-2020 using the (NARDL) model

The results of estimating the (NARDL) model showed the negative and positive effects of the variables of oil prices and inflation on foreign trade, as positive changes in oil prices have a positive and significant effect on trade, while negative changes in oil prices can have a negative effect on trade, but they have a significant effect only when 10% significance level The model estimation results showed that a favorable shock in crude oil prices of 1% would lead to a decrease in gross domestic product (GDP) by 1.152%, a decrease in unemployment by 0.3112%, a decrease in public expenditures by 0.4631%, and an increase in foreign trade by 5.8935%. The results also showed that the occurrence of a shock Favorable inflation of 1% leads to an increase in output by 0.6534% and a decrease in unemployment by 0.013%. The Iraqi economy is a rentier economy and the oil sector dominates the total value of the gross domestic product. It suffers from structural imbalances due to weak policies and programs taken by the government. As a result, it faced many external shocks, the effects of which were reflected in economic development

Navigating Kuwait's water scarcity challenges: A holistic analysis of water resources, environmental impact, cost, and policy implications

Due to fossil fuels abundance at a relatively low cost of extraction, Kuwait relies heavily on non-conventional water resources, namely desalination and treated wastewater, to sustain its water sector. However, Kuwait finds itself balancing between the benefits of its rentier economy and the challenges posed by its reliance on fossil fuels, navigating a complex landscape of economic and environmental sustainability. This paper endeavors to explore the complex paradox surrounding Kuwait's water resources, examining the role of desalination, wastewater treatment, and groundwater extraction. It discusses into the barriers hindering efforts towards reform and mitigation strategies aimed at promoting sustainable water management practices. Including obstacles rooted in various socioeconomic and sociopolitical factors, such as low utility tariffs, heavy dependence on fossil fuels, and deficiencies in the country's water infrastructure. Through the application of a life cycle assessment and a detailed cost analysis, this research unveils the significant environmental and financial burdens associated with Kuwait's current water supply methods, prompting concerns regarding their sustainability and the nation's water security. While the primary focus of this study is on Kuwait, the analysis and findings hold broader implications and repercussions.

Navigating narrow interests: the elite’s role in consociational politics with a rentier economy, the case of Iraq after 2003

ABSTRACT This article hypothesises the intricate role of the elite within a consociational political framework characterised by a rentier economy. It posits that the societal interest is perennially sidelined due to the sectarian and ethnic delineations inherent in the representation of sub-identities. The competition among the elite to secure control over the state’s financial resources, predominantly derived from natural reserves, further exacerbates this neglect, engendering a myopic focus on narrow interests. The chosen case study, Iraq, stands out as a noteworthy exemplar of a consociational political system concomitantly characterised by a rentier economy. Within this milieu, the political elite, despite a protracted period of lacklustre performance spanning nearly two decades, exhibits remarkable resilience and an augmentation of its authoritative stature.

الاقتصاد الريعي وأثره على القدرة التنافسية للصادرات السلعية في الاقتصاد العراقي للمدّة (2004-2021)

The issue of competitiveness occupies wide interest in international economies, especially with the developments represented by globalization and global economic integration, as well as policies of openness and market liberalization. Because the concept of competitiveness goes beyond the state’s ability to produce goods and services that compete in the world to the challenges that enable the state to produce goods and services and offer them in local and international markets. Thus, competitiveness as a concept is linked to export capabilities, the global trade climate, and the state’s ability to access global markets. The respiratory capabilities of any country are linked to the extent of production capabilities and the nature of goods and services that can be exported, and in the Iraqi economy, in which the oil sector dominates the largest proportion of its exports, and this growing proportion of oil exports affects the competitive capabilities of commodity exports significantly, meaning that the competitive capabilities of commodity exports in the Iraqi economy are dependent on Its development and increasing proportions in the oil sector and its export rates. Hence the topic of research came: the rentier economy and its impact on the competitiveness of commodity exports for the period (2004-2021) in the Iraqi economy

Impact of Interrelationships among the Economic Sectors on Achieving Sustainable Development in the Kingdom of Saudi Arabia

This study is aligned with the vision of the Kingdom of Saudi Arabia 2030, which seeks to achieve sustainable economic development. This study aims to estimate the size of the interrelationships among the economic sectors in the Kingdom of Saudi Arabia from the period 1970 to 1920. The descriptive-analytical and econometric approaches were used to display the concepts and literature review relevant to the study as well as to analyze the interrelationships between the sectors of the national economy, which are represented in: the added value of (the manufacturing sector, the non-manufacturing industries sector, the service sector, and the agricultural sector) using Vector Auto- Regression model (VAR) and Impulse Response Functions. The results showed the weakness and limitations of the interrelationships among the economic sectors in the Kingdom of Saudi Arabia, in addition to the absence of leading sectors with a strong impact on the rest of the other economic sectors and are influenced by them as well. Accordingly, the study recommends the need to continue and intensify the diversification efforts made by the government to get out of the scope of a rentier economy, and to strengthen the interrelationships among the various economic sectors by applying appropriate reform models that are integrated with economic policies in a way that achieves the requirements of sustainable economic development.
 
 Keywords: Economic interdependence, economic development, economic sectors, economic diversification, Added Value

دور تنويع أنشطة بعض القطاعات الاقتصادية في نمو الاقتصاد العراقي للمدة (2004-2020)

The fact that the rentier economy depends on one resource such as oil, which makes the economy vulnerable to fluctuations that occur inside or outside the country's economy. Therefore, economic diversification is a necessary goal that must be pursued in a country, especially the petroleum country, in order to strengthen its economy and absorb its capabilities along with With possible changes in the economic situation of the state, and regardless of what can be achieved in terms of other economic goals such as creating job opportunities, reducing unemployment and increasing value added, and what leads to an increase in the gross domestic product that leads to economic growth, there is an urgent need for the current study to adopt This strategy is achieved by understanding the impact of some of the main economic sectors on economic growth, especially the Iraqi economy, which is known as the economy that depends on a quarter of oil. The destruction of the economic structure and the deterioration of the various economic sectors and their decline in their contribution to the GDP. Therefore, the process of adopting an economic diversification strategy is a necessary condition for its exit from the economy Quarterly and unilateral economy to increase the rate of economic growth

The Effectiveness of Financial Sustainability in Targeting Inflation, Nigeria as a Model for the Period 2004-2040

Creating a sovereign fund financed by Nigeria's oil surpluses is a significant objective. Rentier countries tend to see their current operating expenditures increase in tandem with oil revenue growth, surpassing the growth of the gross domestic product. This points to a structural deficit resulting from excessive spending. The government controls the money supply by managing the monetary base, which, in turn, is influenced by foreign reserves. Therefore, the study focused on assessing the effectiveness of fiscal policy tools and financial sustainability in addressing inflation. The goal is to predict these financial variables accurately until 2040 to safeguard monetary stability against fluctuations in oil prices. Utilizing the autoregressive model and moving averages (ARIMA), the study aims to address government spending growth, primarily driven by the monetization of oil revenues. This has led to a structural deficit within the Nigerian economy, which needs to be curbed by the effectiveness of the sovereign fund. This effectiveness is reflected in the concept of financial sustainability, with a focus on targeting inflation through what is known as nominal financial wealth. This translation of economic sustainability into tangible financial wealth does not adequately clarify the increase in non-oil output achieved through investment spending. The latter, in turn, results in actual growth in non-oil revenues, which is essential for addressing inflation through fiscal policy tools. In a rentier economy reliant on oil, achieving economic stability isn't assured solely by a balanced budget. It's crucial that public spending is managed with a level of independence from fluctuations in oil prices. The study's findings demonstrate the relative effectiveness of the financial sustainability forecasting model in influencing inflation targeting in the Nigerian economy.

The rentier economy and its impact on some indicators of sustainable development in the Kingdom of Saudi Arabia (2000-2021)

The study aimed to measure the impact of oil rents on some indicators of sustainable development in the KSA, during the period (2000-2021). In order to investigate the relationships between the variables, a simple linear regression analysis model was described to express the relationship between oil rents as an independent variable, and indicators of sustainable development ]GDP per capita, Spending on education (%of GDP), Unemployment rate, Exports to Imports Ratio, Per capita (% of CO2) [, as dependent variables. Descriptive tests were performed, and the general trend of the variables was identified by the statistical program E-Views9. As expected, the study showed that the GDP, unemployment rate, and Per capita (% of CO2) -as dependent variables- were affected by oil rents -as an independent variable-. The study also found that the most dependent variable affected by oil rents is the GDP. Contrary to what was expected, the study showed that oil rents did not affect spending on education and the ratio of exports to imports.

Targeting Libya’s rentier economy: The politics of energy, water, and infrastructural decay

Libya’s fossil fuel wealth has dominated its political economy and state institutions since the 1960s and paid for large-scale, centralized water and energy infrastructures. Since the 2011 revolution, these infrastructures have been at the center of Libya’s protracted conflict. Unlike other protracted conflicts in the Middle East and North Africa in which water and energy were directly and extensively targeted, we find that warring parties in Libya have largely not sought to destroy but rather control and disrupt Libya’s rentier state institutions. The oil and gas infrastructure, along with the National Oil Company and the central bank that processes oil revenues, are at the heart of elite rivalries over political authority. We find relatively infrequent attacks on centralized water infrastructures. The toll of protracted conflict on water-energy systems has been cumulative, with looting, lack of repair and investment, and departure of qualified personnel. We draw upon an original dataset, qualitative interviews with humanitarian actors, policymakers, and Libyan experts, and a review of extant literature to show how and when local communities, armed militias, former army units, and aspiring warlords sought to capture and leverage water and energy infrastructures. The article highlights the consequences of infrastructure targeting for broader human security.

The Impact of some Agricultural Economic Variables on the Value of the Iraqi Agricultural Domestic Product, an Econometric Study Using the Autoregressive Distributed Time Delay (ARDL) Model for the Period (1990-2021)

The study aimed to identify the most important agricultural economic variables that have an impact on the trends in the value of the Iraqi agricultural domestic product., using the distributed slow autoregressive model, and the study concluded a set of results, perhaps the most important of which are: The existence of a long-term equilibrium relationship between the economic variables of the Iraqi agricultural sector and the value of the Iraqi agricultural domestic product, as the equipped water resources are actually considered one of the most important agricultural economic variables affecting the agricultural domestic product, followed by mechanical technology in the second rank, then the chemical technology variable comes in the third rank, then The variable of cultivated area ranked fourth, and finally the variable of total agricultural fixed capital formation, As for the short term, the actually equipped water resources are also considered one of the most important structural variables affecting the agricultural domestic product, followed by agricultural labor in the second rank, then mechanical technology in the third rank, then the cultivated area in the fourth rank, and finally the variable of total agricultural fixed capital formation. He presented the study. A set of proposals, the most important of which are: Enhancing the role of agricultural economic variables that contribute to raising the value of agricultural domestic product, due to its crucial role in diversifying sources of national income, increasing gross domestic product, and shifting from a rentier economy to a productive economy.

The Role of Digital Investment in Economic Growth in Iraq

The economic developments on the global economic stage have contributed to a qualitative shift in economic fields. Many advanced economies now rely on modern technology, with digital economy taking the lead in these countries. This necessitates those developing countries in general, including Iraq, follow the lead of advanced economies in developing their capacities in the knowledge economy. This is crucial for sustaining their economic resources as they transition from rentier economies, which depend on a single sector and have revenues linked to the external world, making their economies vulnerable to fluctuations and instability. The research is based on the hypothesis that the emergence of the new digital investment is a result of the evolution of information and communication technology. It affects both those who possess information technology and those who lack it, consequently influencing the Gross Domestic Product (GDP). The aim is to shed light on the characteristics of this new digital investment, and to present and analyze the key outcomes of investing in the digital economy. The focus is on indicators of digital access, as well as measuring the relationship between indicators of investment in the digital economy and economic growth.

Combination beyond ideational diffusion: origins and vectors of Bahrain’s Arab nationalism through uneven and combined development

One cannot easily situate the Gulf Arab states homogenously within the literature on Arab nationalism in the scholarship of the International Relations of the Middle East (IRME). Despite the recent historiography of ‘other histories’ of Arab nationalism in the Gulf, the extant research on the international relations of the Gulf has rarely theoretically interrogated how Arab nationalism derived from and evolved through the progression of rentier economy in the Gulf under British Colonialism as a peculiar historical process of late-capitalist social formation. To advance such a theoretical endeavour, this paper applies the concept of uneven and combined development (UCD) to the case of Bahrain under British colonialism. It argues that combined capitalist development in the Gulf under British colonialism fully activated Arab nationalism through the social mechanism of oil commodification. This historical process of combination created a vector for Bahrain’s early capitalist development and generated changing class relations and internal contradictions associated with the origins of Bahrain’s Arab nationalism. Most importantly, ‘combination’ transformed an early diffused national consciousness in the era of al-Nahda into a nationalist ideology in modern times, of which its agenda presents Bahrain’s peculiar experience among other non-peculiar cases in the Middle East.

Parasitical elitism in a sectarianized political system with a rentier economy: The power and practice of the Iraqi political elite after 2003

AbstractThis article theorizes the role of the elite in a sectarianized political system with a rentier economy. It argues that by virtue of the sectarian and ethnic representation of the sub‐identities, the long‐term interests of society are neglected. The reliance on natural resources creates a competition within the elite to seize the state's revenue for narrow interests. Finally, in such a setting, the elite attempts the monopolization of the flow of information to the public to shore up its legitimacy. The case study is Iraq since it is one of the few, if not the sole, sectarianized political system with a rentier economy. The political elite, despite an abysmal performance for nearly two decades, has been resilient and garnered more power. The continuous malpractice encompasses all the political players who agree on the governing rules by which they maintain their position within the system, and with limited circulation of the elite.Related ArticlesAli, Hamid E., and Shahjahan Bhuiyan. 2022. “Governance, Natural Resources Rent, and Infrastructure Development: Evidence from the Middle East and North Africa.” Politics & Policy 50(2): 408–40. https://doi.org/10.1111/polp.12451.Howie, Peter. 2018. “Policy Transfer and Diversification in Resource‐Dependent Economies: Lessons for Kazakhstan from Alberta.” Politics & Policy 46(1): 110–40. https://doi.org/10.1111/polp.12239.Khodr, Hiba. 2014. “A Preliminary Comparative Study of Policy Making in Two GCC Countries—Qatar and Kuwait: Processes, Politics, and Participants.” Politics & Policy 42(2): 271–310. https://doi.org/10.1111/polp.12068.

The Future of Arab Democracy under the Rentier System: The Case of Sudan

The rentier economy has long been an important source of power for autocratic regimes, serving as a key tool for Arab authoritarianism. Rentierism is a grave matter as it not only hinders economic liberalisation, but it also disrupts the development of democracy. Following the political economy literature that demonstrates an inverse correlation between democracy and rentierism and shows the responsibility of political systems for the emergence of rentier practices, this paper examines how ruling elites in Arab states use rents to buttress their authoritarian regimes and obstruct the building of a democratic society. To better understand the factors that shape and sustain the rentier system, the paper focuses on the case of Sudan, where rentierism is deeply embedded. The paper sheds light on the challenges impeding the transfer of power from the military establishment to civilian elites, given the resilience of the rentier economy and the prevalence of negative practices that strengthen authoritarianism, such as the spread of clientelism and endemic levels of corruption. The paper concludes that it is impossible to build a democratic system in the shadow of the rentier structure. It also discusses ways to dismantle the rentier economy in Sudan to ensure the emergence of a productive state by moving beyond the rentier social contract to a new social pact.

The Impact of Oil Price Volatility on Economic Growth and Stability in Iraq through the Public Expenditure for the Period (2003-2020)

Purpose: The purpose of the research is to analyze fluctuations in global oil prices and identify the factors that control them. The study aims to clarify the nature and characteristics of the international oil market, as well as the relationship between oil, public expenditure, and the economy in rentier countries. The research seeks to provide insights into the economic effects of the dominance of the oil resource and track the trends of oil, public expenditure, economic growth, and development in Iraq. Additionally, the study aims to evaluate the extent to which the fiscal policies pursued by oil rent countries are serving their goals, and to recommend ways to ensure the rationalization of public expenditure and real economic growth in these countries. Theoretical framework: the research is based on several economic theories related to the international oil market and rentier economies. The study uses theories such as supply and demand, rentier state, Dutch disease, and public choice theory to analyze the economic effects of oil revenues in rentier countries, the factors that control the international oil market, and the behavior of governments and policymakers in allocating public funds. Design/methodology/approach: The study adopted the induction method to achieve the objectives of the research and get the intended results by analyzing the data and statistical tables of the sample country. Findings: The research findings suggest that oil rents lead to inefficiency, increased centralization of power, and patterns of public expenditure that decrease efficiency. Rentier economies face challenges in diversifying and reducing their dependence on oil exports. Adherence to budgets and developing transparent and flexible principles is crucial for real economic growth in rentier economies. Effective management of oil revenues and public expenditure is essential for sustainable economic growth in these economies. Research, Practical & Social implications: The research has practical implications for policymakers, emphasizing the need for effective management of oil revenues and public expenditure for sustainable economic growth. Social implications relate to the impact of oil revenues on society, highlighting the need for improved living standards and reduced poverty. Originality/value: The research is valuable as it provides original insights into the economic effects of oil rents and highlights the challenges faced by policymakers in managing rentier economies. The study's emphasis on effective management of oil revenues and public expenditure and the development of transparent and flexible principles adds value to the literature. The research provides valuable insights into the international oil market and emphasizes the importance of sustainable economic growth.

The Renewable Rentier State in Algeria

Abstract This article focuses on a major problem: How can the rentier state renew itself? The article focuses on oil-producing countries and their ability to survive during the economic crises they are exposed to due to the collapse of oil prices and the shocks they generate. The oil rentier state has proven its ability to rebuild itself after oil shocks. This study thus analyzes the basic ingredients for the renewal of the rentier state: the rentier economy, the rentier system, and rentier society. Algeria was chosen as a case study during the period under consideration (2000–2022) because it is an oil rentier country that was exposed to both an oil boom and oil shock. The article includes four axes: the definition of the renewable rentier state; the sustainable crises of the rentier state in Algeria; levels of renewal of the rentier state in Algeria; the rentier state between continuity and change after the popular movement in Algeria.

Identifying drivers affecting air quality in metropolitan areas of developing countries: evidence from Tehran metropolitan area.

Environmental issues and the significant reduction of air quality in the metropolitan areas of developing countries have become chronic challenges. While the impacts of many reasons such as the rapid trend of urbanization, lacking sustainable thinking in urban planning approaches, and urban sprawl have been explored in previous literature, the role of political economy, especially the structure based on the rentier economy, in the change of air quality as an environmental challenge in the metropolitan areas of developing countries has received little attention. To fill this gap, this study focuses on the role of the rentier economy and identifies the drivers based on it that have a tremendous impact on the air quality in Tehran metropolitan area, Iran. To this end, using the Grounded Theory (GT) foundation database and two-round Delphi survey, the opinions of 19 experts were used to identify and explain major drivers that impact air quality in Tehran. Our findings revealed that nine major drivers have an increasing impact on the air quality in the metropolitan area of Tehran. These drivers considering the dominance of the rentier economy are interpreted as the lack of powerful local governance, the rental economy, centralized structure of government, unsustainable economic development, institutional conflicts, a faulty planning system, financial unsustainability of municipalities, unfair distribution of power, and inefficient urban development policies. Among the drivers, the impacts of institutional conflicts and lack of powerful local governance on air quality are more considerable. This study highlights the role of the rentier economy as a major obstacle to resilient responses and constructive actions against chronic environmental challenges such as drastic changes in air quality in metropolitan areas of developing countries.