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Studies in Comparative International Development

, Volume 52, Issue 4, pp 457–482 | Cite as

Does Oil Hinder Social Spending? Evidence from Dictatorships, 1972–2008

  • Ji Yeon HongEmail author
Article

Abstract

This paper examines the effects of natural resource abundance on social spending in dictatorships. Natural resources, particularly oil, provide authoritarian leaders with economic rents without widescale labor force participation. I argue that dependence on natural resource production thus reduces dictators’ incentive to invest in human capital, which is reflected in lower levels of social spending. Using a panel dataset of authoritarian regimes between 1972 and 2008, I find that oil abundance leads to significantly lower levels of social spending by authoritarian governments. The negative effects are especially prominent concerning expenditures for public education and health: when an authoritarian country earns ten more dollars per capita from oil production, per capita spending on education and health decreases by approximately 1%. Extended analysis shows that the negative impact of oil on social spending is peculiar to authoritarian regimes; no impact of oil wealth on social expenditures is found among democracies.

Keywords

Dictatorship Social spending Human capital The resource curse 

Supplementary material

12116_2017_9237_MOESM1_ESM.pdf (103 kb)
ESM 1 (PDF 103 kb)

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Division of Social ScienceHong Kong University of Science and TechnologyKowloonChina

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