We study theoretically and empirically whether natural resource windfalls aff ect political regimes. We document the following regularities.
Natural resource windfalls have no e ffect on the political system when they occur in democracies. However, windfalls have signifi cant political consequences in autocracies. In particular, when an autocratic country receives a positive shock to its flow of resource rents it responds by becoming even more autocratic. Furthermore, there is heterogeneity in the response of autocracies.
In deeply entrenched autocracies the e ect of windfalls on politics is virtually nil, while in moderately entrenched autocracies windfalls signi cantly exacerbate the autocratic nature of the political system.
A new paper by Caselli and Tesai