242 P. MAHDAVI AND N. UDDIN
entrepreneurship and instead divert efforts into non-productive, rentseeking activities. 13 This is partly explained by extreme under-investment
in the education sector following resource booms, such that resource
wealth effectively crowds out the conditions needed for the development
of human capital. 14
Under What Conditions Are Resources a Curse or a Blessing?
Yet the ‘curse’ is clearly not ubiquitous: the theory could not explain
the emergence of established oil-rich democracies such as the United
States, Canada, Norway, and the UK, nor the wave of democratization that hit the oil-rich states of Latin America. Hence the theory
shifted to a ‘conditional resource curse,’ whereby certain pre- and postresource-discovery conditions mediated the negative effects of petroleum
on politics. 15 Thad Dunning, for instance, argues that the interaction
between resource wealth and income inequality explains why oil reduced
the likelihood for democratization in Angola, Algeria, and Nigeria, but
not in Brazil, Colombia, Mexico, and Venezuela. 16 Dunning’s argument
implies that relatively low levels of income inequality in the MENA,
combined with high dependence on resource wealth, made elites wary of
democratization for fear of losing these rents to distributive demands. In
explaining the persistence of democracy in the UK and the US, Timothy
Mitchell argues that fossil fuel production—particularly coal—created a
new political base of power in the form of unions and working-class organizations. 17 These provided the means for a classic modernization effect,
whereby unions demanded more progressive and inclusive policies from
their governments. Oil, by contrast, did not have the same effects given its
capital intensity; the death of oil-based labor movements under Thatcher
certainly attests to this vision of energy political history.
Much of the basis for earlier claims about the effects of natural
resources on politics is that these resources were by and large ‘exogenous.’ That is, these theories assumed that political forces did not shape
the production of resources, but rather that resource endowments were
due to chance: some countries were lucky to have oil and therefore could
reap its benefits as though they were ‘manna from heaven.’ This is now
known to be a problematic assumption, given the political determinants
of whether a country cultivates its natural resource wealth and ultimately becomes reliant on its revenues. 18 Victor Menaldo, for instance,
entrepreneurship and instead divert efforts into non-productive, rentseeking activities. 13 This is partly explained by extreme under-investment
in the education sector following resource booms, such that resource
wealth effectively crowds out the conditions needed for the development
of human capital. 14
Under What Conditions Are Resources a Curse or a Blessing?
Yet the ‘curse’ is clearly not ubiquitous: the theory could not explain
the emergence of established oil-rich democracies such as the United
States, Canada, Norway, and the UK, nor the wave of democratization that hit the oil-rich states of Latin America. Hence the theory
shifted to a ‘conditional resource curse,’ whereby certain pre- and postresource-discovery conditions mediated the negative effects of petroleum
on politics. 15 Thad Dunning, for instance, argues that the interaction
between resource wealth and income inequality explains why oil reduced
the likelihood for democratization in Angola, Algeria, and Nigeria, but
not in Brazil, Colombia, Mexico, and Venezuela. 16 Dunning’s argument
implies that relatively low levels of income inequality in the MENA,
combined with high dependence on resource wealth, made elites wary of
democratization for fear of losing these rents to distributive demands. In
explaining the persistence of democracy in the UK and the US, Timothy
Mitchell argues that fossil fuel production—particularly coal—created a
new political base of power in the form of unions and working-class organizations. 17 These provided the means for a classic modernization effect,
whereby unions demanded more progressive and inclusive policies from
their governments. Oil, by contrast, did not have the same effects given its
capital intensity; the death of oil-based labor movements under Thatcher
certainly attests to this vision of energy political history.
Much of the basis for earlier claims about the effects of natural
resources on politics is that these resources were by and large ‘exogenous.’ That is, these theories assumed that political forces did not shape
the production of resources, but rather that resource endowments were
due to chance: some countries were lucky to have oil and therefore could
reap its benefits as though they were ‘manna from heaven.’ This is now
known to be a problematic assumption, given the political determinants
of whether a country cultivates its natural resource wealth and ultimately becomes reliant on its revenues. 18 Victor Menaldo, for instance,