No representation without taxation? Rents, development, and democracy

Comparative Politics

Volumn 37, Issue 3, 2005, Pages

  Herb, Michael ^a  

^a NONE

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[No Author keywords available]

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EID: 18144400587     PISSN: 00104159     EISSN: None     Source Type: Journal    
DOI: 10.2307/20072891     Document Type: Article

References (67)

1. Michael L. Ross, "Does Oil Hinder Democracy?," World Politics, 53 (April 2001), 356-57.
2. John Clark, "Petro-Politics in Congo," Journal of Democracy, 8 (July 1997), 62-76.
3. Jeffrey D. Sachs and Andrew M. Warner, "Natural Resource Abundance and Economic Growth," National Bureau of Economic Research, Working Paper 5398 (1995);
4. Richard M. Auty and Raymond F. Mikesell, Sustainable Development in Mineral Economies (Oxford: Oxford University Press, 1998).
5. See, for instance, Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997).
6. Hazem Beblawi, "The Rentier State in the Arab World," in Giacomo Luciani, ed., The Arab State (Berkeley: University of California Press, 1990), pp. 87-88.
7. The concept derives from the usage of the term rent in classical political economy. Rents are not generated by productive human activity but instead by the scarcity value of natural endowments. David Ricardo, On the Principles of Political Economy and Taxation (London: John Murray, 1921), pp. 54-55.
8. Lisa Anderson, "The State in the Middle East and North Africa, " Comparative Politics, 20 (October 1987), 1-18;
9. Jill Crystal, Oil and Politics in the Gulf: Rulers and Merchants in Kuwait and Qatar (Cambridge: Cambridge University Press, 1995);
10. Giacomo Luciani, "Allocation vs. Production States: A Theoretical Framework," in Giacomo Luciani, ed., The Arab State (Berkeley: University of California Press, 1990), pp. 65-84;
11. Dirk Vandewalle, Libya since Independence: Oil and State-Building (Ithaca: Cornell University Press, 1998).
12. Anderson, p. 10.
13. Quintan Wiktorowicz, "The Limits of Democracy in the Middle East: The Case of Jordan," Middle East Journal, 53 (Autumn 1999), 608.
14. Jacques Delacroix, "The Distributive State in the World System," Studies in Comparative International Development, 15 (Fall 1980), 3-21. For a more extensive discussion of these three arguments, see Ross.
15. Gwenn Okruhlik, "Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of Rentier States," Comparative Politics, 31 (April 1999), 295-315.
16. Michael Herb, "Taxation and Representation," Studies in Comparative International Development (Fall 2003).
17. Michael Herb, All in the Family: Absolutism, Revolution and Democracy in the Middle Eastern Monarchies (Albany: State University of New York Press, 1999), pp. 256-59.
18. John Waterbury, "From Social Contract to Extraction Contracts: The Political Economy of Authoritarianism and Democracy," in John P. Entelis, ed., Islam, Democracy and the State in North Africa (Bloomington: Indiana University Press, 1997), p. 153.
19. Seymour Martin Lipset, "Some Social Requisites of Democracy: Economic Development and Political Legitimacy," American Political Science Review, 53 (March 1959), 69-105;
20. Ross E. Burkhart and Michael S. Lewis-Beck, "Comparative Democracy: The Economic Development Thesis," American Political Science Review, 88 (December 1994), 903-10.
21. Ross, pp. 342-43.
22. Samuel P. Huntington, The Third Wave: Democratization in the Late Twentieth Century (Norman: University of Oklahoma Press, 1991), p. 65.
23. Ronald Inglehart, "The Renaissance of Political Culture," American Political Science Review, 82 (December 1988), 1219.
24. Seymour Martin Lipset, Kyoung-Ryung Seong, and John Charles Torres, "A Comparative Analysis of the Social Requisites of Democracy," International Social Science Journal, 45 (May 1993), 166.
25. Clark, p. 74.
26. The calculation works in the short run. It is assumed that a windfall's impact on GDP has no multiplicative effects. Thus, for example, subtracting all of Qatar's oil income leaves a very substantial residual GDP that is the consequence of previous years' oil exports, making it difficult to get at the counterfactual case of a Qatar that never had oil. Ross, pp. 342-43.
27. Since it is suspected that per capita GDP, when confounded by rent wealth, is not a "true" measure of development, another variable that is a better measure of development-that is, one that better measures how rents contribute to development - could be sought. Female literacy comes to mind. Yet, without an exact knowledge of how rent wealth increases female literacy figures, it is not possible to subtract the positive effects of oil wealth from the negative, arriving at the net effect.
28. The rentierism measure includes both rich and poor countries. See below for the results of an analysis done with a variable that excludes the poorer rentiers.
29. It might be preferable to identify a prerent per capita GDP, then extrapolate forward using regional averages (for nonrentiers). Unfortunately, a clear prerent per capita GDP figure is available for only one or two rentier states in the Penn World Tables 5.6 dataset.
30. Comparison nonrentiers are in parentheses: Iraq (Egypt and Jordan); Libya (Egypt); Algeria (Morocco and Tunisia); Botswana, Congo Brazzaville, and Gabon (average of nonrentiers in sub-Saharan Africa); Kiribati (average of nonrentier Pacific island states); Venezuela (Brazil). I reduced Trinidad's GDP by one-third. Some rentiers were not included in the regressions because of missing data.
31. Luciani, p. 72.
32. Sachs and Warner, p. 8; Ross.
33. International Monetary Fund, Staff Country Reports.
34. Sachs and Warner; Auty and Mikesell.
35. Hal Hill, The Indonesian Economy since 1966 (Cambridge: Cambridge University Press, 1996), pp. 47-52.
36. There is little collinearity between the measures of rentierism or oil export dependency and other independent variables. The adjusted R-squared of the Muslim population percentage correlated with rentierism is 0.17, and with oil export dependency, 0.16. The adjusted R-squared of the Muslim population percentage correlated with the regional democracy score is 0.28.
37. More generally, I did not count as rent anything that creates dependence on a single foreign state. I include grants in the denominator, as government revenue.
38. I constructed this variable by subtracting oil imports from oil exports, then calculating the balance as a percentage of GDP. Negative values (indicating net oil imports) were set to zero. Twenty data points were dropped because they were manifestly in error, for the Bahamas, the UAE, Oman, and Kuwait. Data are from the World Bank's World Development Indicators CD-ROM, 1999 and 2001.
39. Many governments collect oil revenues as taxes. Nontax revenue includes all sorts of things, such as revenues from state-owned enterprises. As a result, the correlation (R-squared) between my measure of rentierism and nontax income is only 0.46; the correlation between oil export dependence and nontax revenue is 0.42. Given the existence of two far better measures, there is little profit from running the analysis using these data.
40. Burkhart and Lewis-Beck; Adam Przeworski, Michael E. Alvarez, Jose Antonio Cheibub, and Fernando Limongi, Democracy and Development: Political Institutions and Well-Being in the World, 1950-1990 (Cambridge: Cambridge University Press, 2000), p. 83, note 4;
41. John B. Londregan and Keith T. Poole, "Does High Income Promote Democracy?" World Politics, 49 (October 1996), 1-30.
42. Mark J. Gasiorowski, "Economic Crisis and Political Regime Change: An Event History Analysis," American Political Science Review, 89 (December 1995), 882-97.
43. Israel was included in the European region; the regional influence variable is meant to measure the effect of common culture and ideological currents and not mere geographic propinquity. Former Soviet republics in Asia are not in the dataset as a result of their absence in the Penn World Tables; they compose a seventh region.
44. David B. Barrett, George T. Kurian, and Todd M. Johnson, World Christian Encyclopedia: A Comparative Survey of Churches and Religions in the Modern World (Oxford: Oxford University Press, 2001).
45. I considered several other variables based on the findings of previous studies but dropped them when they did not affect the results and proved insignificant statistically. They include Protestant and Catholic shares of the population and several measures of ethnolinguistic fragmentation. Data availability problems are severe for rentier states, making it difficult to use some other measures, such as inequality. I used Philip G. Roeder's ethnolinguistic fragmentation data, downloaded from weber.ucsd.edu/~proeder/elf.htm on February 20, 2002.
46. Nathaniel Beck and Jonathan N. Katz, "Nuisance vs. Substance: Specifying and Estimating Time-Series Cross-Section Models," Political Analysis, 6 (1996), 4-5;
47. Nathaniel Beck and Jonathan N. Katz, "What to Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review, 89 (September 1995), 634-47.
48. A Lagrange multiplier test indicates some remaining serial correlation, but the results were comparable to those found by Beck and Katz in their reanalysis of Burkhart and Lewis-Beck. In these circumstances, Beck and Katz recommend no further transformation of the data. Beck and Katz, "Nuisance vs. Substance," pp. 9-10, 28, 30-31.
49. Data that make possible the replication of my results can be found at www.gsu.edu/~polmfh and at the Inter-University Consortium for Political and Social Research (ICPSR) at www.icpsr.umich.edu.
50. There are more observations when using counterfactual GDP. When these observations are dropped, the coefficient for rentierism was -.111, and the coefficient for oil export dependence was -.174.
51. Beck and Katz, "Nuisance vs. Substance," pp. 28-29.
52. Christopher Achen, "Why Lagged Dependent Variables Can Suppress the Explanatory Power of Other Independent Variables," paper presented at the American Political Science Association annual conference, 2000, p. 24.
53. See Burkhart and Lewis-Beck, p. 905;
54. Beck and Katz, "Nuisance vs. Substance";
55. Ross, p. 339.
56. Achen, p. 21.
57. See, for example, Robert J. Barro, "Determinants of Democracy, " Journal of Political Economy, 107 (1999), S158-83.
58. Autocorrelation in the errors, in a model without the LDV, fell to between .77 and .84 (regressing the residuals against their lags). In the full model (with the LDV), the coefficient of the LDV fell to between .788 and .797.
59. I broke the data into three datasets, each containing observations at three year intervals. Complete regression results for this and other unreported analyses can be found at www.gsu.edu/~polmfh.
60. See, for example, David S. Brown and Wendy Hunter, "Democracy and Social Spending in Latin America, 1980-92," American Political Science Review, 93 (December 1999), 781.
61. There is little argument for removing the lagged democracy score altogether. It is, of course, no longer an LDV And it makes sense that change in democracy scores might be related to the level of democracy scores; the variable is highly significant. When the variable is removed, the model loses coherence, with no variables achieving significance.
62. In a Lagrange Multiplier test, the lagged residual had a coefficient of .78, with a t-ratio of 67. Ross avoided this problem by using FGLS.
63. Specifically, the residuals are similar from one observation to the next, which produces autocorrelation.
64. Gary King, "Proper Nouns and Methodological Propriety: Pooling Dyads in International Relations Data," International Organization, 55 (Spring 2001), 498-99;
65. Donald P. Green, Soo Yeon Kim, and David H. Yoon, "Dirty Pool, " International Organization, 55 (Spring 2001), 441-68.
66. Nathaniel Beck, "Time-Series - Cross-Section Data: What Have We Learned in the Past Few Years?" Annual Review of Political Science (2001), 283-85; Londregan and Poole, pp. 11-13.
67. Monty G. Marshall and Keith Jaggers, Polity IV Project: Dataset Users Manual (College Park: Center for International Development and Conflict Management, 2000), pp. 18 and 14 for the consequences when XRCOMP is 0.