The oil nouveau riche and arms imports

TY - JOUR

T1 - The oil nouveau riche and arms imports

AU - Vezina, Pierre-Louis

PY - 2021/1/24

Y1 - 2021/1/24

N2 - Countries that strike it rich when exploring for oil and gas often fail to see growth materialise. This paper shows that one way things can go awry is via squandering new wealth, based on future resource revenues, on arms imports. Across developing countries, in the 5 years following a giant oil or gas discovery, arms imports increase by 30% on average. This effect only occurs in non-democracies with high levels of corruption, and there is suggestive evidence that it is driven in part by arms imports from China and Russia, and not by imports from other major arms exporters. These estimates can be interpreted causally as the timing of giant oil discoveries is unpredictable due to the uncertain nature of exploration.

AB - Countries that strike it rich when exploring for oil and gas often fail to see growth materialise. This paper shows that one way things can go awry is via squandering new wealth, based on future resource revenues, on arms imports. Across developing countries, in the 5 years following a giant oil or gas discovery, arms imports increase by 30% on average. This effect only occurs in non-democracies with high levels of corruption, and there is suggestive evidence that it is driven in part by arms imports from China and Russia, and not by imports from other major arms exporters. These estimates can be interpreted causally as the timing of giant oil discoveries is unpredictable due to the uncertain nature of exploration.

UR - http://www.scopus.com/inward/record.url?scp=85113336042&partnerID=8YFLogxK

U2 - 10.1093/jae/ejaa017

DO - 10.1093/jae/ejaa017

M3 - Article

SN - 0963-8024

VL - 30

SP - 349

EP - 369

JO - JOURNAL OF AFRICAN ECONOMIES

JF - JOURNAL OF AFRICAN ECONOMIES

IS - 4

ER -