On a model for the nexus between resource wealth and political regimes (Q333008)

Summary: We study in some detail a model proposed in [\textit{F. Caselli}, Power struggles and the natural resource curse. London: London School of Economics (2006)], concerning the impact of natural resource rents on leader's policy. A major result of the analysis is that a reduction in resource rents can give rise to a political transition, from autocracy to democracy. It is also shown that incumbent leaders under the threat of a coup may decide not to make productive investments, if resource rents and probability of success of a coup are high. Both facts are in agreement with well-established empirical observations.