Oil and Democracy

According to a wide literature, oil has a negative effect on the level of democracy because of induced economic and political distortions. At the same time, however, oil fosters economic development and people’s general life conditions. Using 30 years of international data on 34 oil countries, we show that the total effect is negative and significant and provide an estimate of the oil-democracy demultiplier. Moreover, we obtain an indicator of the surplus/deficit of democracy, highly correlated with the revolutions currently unfolding in the Mediterranean.