On a model for the nexus between resource wealth and political regimes

Abstract

We study in some detail a model proposed in [3], concerning the impact of natural resource rents on leader’s policy. A major result of the analysis is that a reduction in resource rents can give rise to a political transition, from autocracy to democracy. It is also shown that incumbent leaders under the threat of a coup may decide not to make productive investments, if resource rents and probability of success of a coup are high. Both facts are in agreement with well-established empirical observations.