Redistribution Preferences of Political Regimes under the Influence of Resource Rents: An Empirical Analysis for the developing countries.

Abstract

Several studies have investigated the impact of resource rents and political regimes on income inequality separately. To the best of our knowledge there is no study that fully considered both issues in same model. In this study we consider both aspects, investigating redistribution preferences of political regimes under the influence of oil rents and other resource rents for developing countries.

We take a panel data approach for countries and find evidence that the impact of political regimes on income inequality is under the influence of oil rents, while other resource rents do not show any significant influence. We conclude that in developing countries authoritarian regimes contribute to decrease income inequality while democratic regimes tend to increase income inequality when they are under the influence of oil rents.

This paper is innovative since it shows that democratic redistribution theory does not work for developing countries and in fact it shows opposite results under influence of oil rents. As a consequence of authoritarianism, regimes lose democratic legitimacy and to buy off the public unrest they redistribute oil rents.