More Oil, Less Democracy : Evidence from Worldwide Crude Oil Discoveries

This paper exploits variations in the timing and size of oil discoveries to identify the impact of oil wealth on democracy. I use a unique dataset from the Association for the Study of Peak Oil and Gas and other sources describing worldwide oil endowment, exploration, discoveries, and oilfield geology. Using oil discovery as a quasi-experiment, I find that discovering oil decreases a country's 30-year change in democracy, as measured by the Polity Index. On average, discovering 100 billion barrels pushes a country's democracy level almost 20 percentage points below trend. The estimated effect per barrel is larger for oilfields with higher-quality oil and lower exploration and extraction costs. Excluding large Middle East producers from the sample does not affect these results