To Take or Not to Take: The Politics of Natural Resource Nationalization (under review)
Why do governments nationalize extractive resources? Operational nationalization -- whereby states take de facto control over the physical production of resources -- increases government collection of natural resource revenues that would otherwise flow to outside firms. Despite these rewards, nationalization entails immediate political costs and future operational inefficiencies. This book offers a novel theory of how the probability of leader survival is endogenous to the decision to nationalize operations. Leaders who foresee a long and lasting rule will eschew nationalization in order to reap the long-term benefits of maintaining private operations. Leaders who instead perceive their days in power are numbered will bear the risks of nationalization to capture its short-term fiscal gains in order to consolidate rule and increase their duration in power. Drawing from an original dataset of oil nationalizations across the world since 1900, this book tests the implications of the argument with a combination of cross-national statistical analyses and within-country over-time case studies in Iran, Iraq, and Saudi Arabia. These findings call for reevaluating the conventional wisdom about nationalization and political survival.
"Scraping public co-occurrences for statistical network analysis of political elites."
Forthcoming at Political Science Research & Methods. DOI: 10.1017/psrm.2017.28.
Collecting network information on political elites using conventional methods such as surveys and text records is challenging in authoritarian and/or conflict-ridden states. I introduce a data collection method for elite networks using scraping algorithms to capture public co-appearances of individuals at political and social events. After validating the method with existing elite network data in the US, Mexico, and North Korea, I apply the technique to Nigeria to show that, in contrast to existing work, patronage does not drive presidential appointments to the state-owned oil company. Given that theories on elite behavior aim to understand individual-level interactions, the applicability of data using the proposed technique is large, especially in situations where intrusive data collection is costly or prohibitive.
"Global progress and backsliding on gasoline taxes and subsidies." (ungated)
Nature Energy. vol. 2, no. 16201 (January 2017). Co-authored with Michael Ross and Chad Hazlett.
To reduce greenhouse gas emissions in the coming decades, many governments will have to reform their energy policies. These policies are difficult to measure with any precision. As a result, it is unclear whether progress has been made toward important energy policy reforms, such as reducing fossil fuel subsidies. We use new data to measure net taxes and subsidies for gasoline in almost all countries at the monthly level and find evidence of both progress and backsliding. From 2003 to 2015 gasoline taxes rose in 83 states but fell in 46 states. During the same period, the global mean gasoline tax fell by 13.3 percent due to faster consumption growth in countries with lower taxes. Our results suggest that global progress toward fossil fuel price reform has been mixed, and that many governments are failing to exploit one of the most cost-effective policy tools for limiting greenhouse gas emissions.
"Explaining the Oil Advantage: Effects of Natural Resource Wealth on Incumbent Reelection in Iran."
World Politics. vol. 67, no. 2 (April 2015), pp. 226-267.
Why does natural resource wealth prolong incumbency? Using evidence from parliamentary elections in the Islamic Republic of Iran, I show that natural resource revenues boost incumbent reelection rates because this revenue is used to provide public or private goods to constituents, incentivizing voters to reelect incumbents over challengers. To test this hypothesis, I employ originally assembled data on five parliamentary elections in Iran (1992-2008) in longitudinal hierarchical regression analysis at the district and province level. By leveraging Iran's mixed-member electoral system, I am able to show that the resource-incumbency mechanism works primarily in single-member districts with little evidence of an incumbency advantage for politicians in resource-rich multi-member districts. Building on the rentier theory of natural resource wealth, my results suggest that voting for the incumbent is attributable to patronage and public goods distribution. My findings offer new insights into the understudied context of Iranian legislative elections, illustrate the mechanisms driving the relationship between resource wealth and incumbency advantage at the sub-national level in a non-democratic setting, and highlight the mediating effects of electoral institutions on the resource-incumbency relationship.
"Why Do Leaders Nationalize the Oil Industry? The Politics of Resource Expropriation."
Energy Policy. vol. 75, no. C (December 2014), pp. 228-243.
Why do leaders nationalize the oil industry? In line with a general utility-maximizing theory, I argue that leaders nationalize to maximize state revenues while minimizing costs. The latter includes international retaliation and domestic political constraints. Using a novel longitudinal dataset on the establishment of national oil companies (NOCs), the empirical evidence presented in this paper lends support to four primary findings. States are most likely to establish NOCs (1) in periods of high oil prices, when the risks of expropriation are outweighed by the financial benefits; (2) in non-democratic systems, where executive constraints are limited; (3) in `waves', that is, after other countries have nationalized, reflecting reduced likelihood of international retaliation; and, though with weaker empirical support, (4) in political settings marked by resource nationalism. This last factor is proxied by OPEC membership in large-N analysis and, in a two-case comparison, by the difference in retained profits between the host and foreign governments. The theory and empirics presented here offer some clues for policy makers and multinational companies alike as to when to expect leaders to opt for nationalization.
"The Institutional Components of Political Corruption." 2015. In Ruben Ruiz Rufinio and Jennifer Gandhi (eds.), Handbook of Comparative Political Institutions (New York: Routledge Press). Co-authored with Miriam Golden.
This chapter reviews what we have learned in the last twenty-five years about how formal political institutions affect political corruption, understood as the misuse of public office for private or partisan gain. We discuss the impact of basic political institutions in established democratic polities on corruption: executive institutions; electoral institutions; federalism; and, finally, judicial institutions. A second section considers how whether and when voters punish corrupt politicians and how political corruption affects the performance of government bureaucracy, especially as regards service delivery. Finally, we discuss possible explanations for why the establishment of democratic political institutions appears to exert so little influence on the degree of political corruption. Our analysis of existing literature attends to problems of casual inference. Looking ahead to future studies, we suggest that the most fruitful research in the next decade will be subnational, experimental or quasi-experimental, and non-institutional.
"Oil, monarchy, revolution, and theocracy: a study on the National Iranian Oil Company (NIOC)." 2012. In David Victor, David Hults and Mark Thurber (eds.), Oil and Governance (Cambridge, UK: Cambridge University Press).
This chapter looks at the history of the National Iranian Oil Company (NIOC) and how its structure and operations are integrated with the Iranian state and the company's political masters. Using evidence from the Central Bank of Iran, the Ministry of Petroleum, and field interviews with former NIOC officials, I argue that NIOC's relationship with the state has shifted from a strategy of compliance under the Shah (1954-1979), to autonomy after the revolution (1979-2004) and back again to strict compliance in the Ahmadinejad era (2005-2012). This dynamic strategy corresponds with NIOC's performance: strong before the revolution, weak during the early period of the Islamic Republic, moderately successful in the 1990s, and inefficient during the Ahmadinejad period. Ultimately, my findings suggest that the root cause of NIOC's production woes is the company's lack of autonomy from the government.
Ross, Michael and Paasha Mahdavi. "Oil and Gas Data, 1932-2014." http://dx.doi.org/10.7910/DVN/ZTPW0Y. Harvard Dataverse. (Sep 2015).
Global dataset of oil and natural gas production, prices, exports, and net exports. Oil production and prices data are for 1932-2014 (2014 data are incomplete); gas production and prices are for 1955-2014; export and net export data are for 1986-2013. Country codes have been modified from earlier versions to conform to Correlates of War (COW) and Quality of Government (QOG) standards. See codebook for details.
While some oil-rich countries are highly corrupt, others have transparent and well-functioning governments. What explains this wide variation in so-called 'resource-cursed' states? I show that these differences result from domestic institutional choices over how oil extraction is governed. Some governments grant procurement authority -- the ability to award contracts for production rights -- to national oil companies (NOCs), while others place this authority in ministries. Building upon agency theory, I argue that this choice matters: the relative political autonomy of NOCs compared to ministries fosters an opaque regulatory environment that incentivizes malfeasance. Using new data on transnational bribes in 59 oil-producing countries, I show evidence for a robust link between oil-related institutions and bribery, even after addressing the endogeneity of institutional choice via instrumental variables analysis. This research has implications not only for the political economy of the resource curse hypothesis, but also for existing theories on transnational bribery and regulatory independence.
"Dynamics of the inner elite in dictatorships: Evidence from North Korea." Co-authored with John Ishiyama. (under review)
How does the circle of inner elites evolve over time in dictatorships? We draw on theories of authoritarian power-sharing to shed light on the evolution of politics in the Democratic People’s Republic of Korea. Yet the evaluation of competing theories is difficult in the North Korean context given the inherent challenges in collecting individual-level data on the formation and dissolution of elite circles surrounding the Supreme Leader. In this paper, we address this shortcoming using data on the evolution of the inner elite under Kim Jong-un (2012-2015). Employing web-scraping techniques to capture inspection visits by the Supreme Leader as reported by the state-run Korean Central News Agency, we assemble network data on the co-occurrence of high-ranking elites in these visits over time. We test the network durability of the inner elite since Kim Jong-un’s rise to power in January 2012 to find suggestive evidence of elite shuffling. Our findings contribute to the broader literature on elite dynamics in authoritarian regimes and to subnational studies on the politics of power-sharing in communist states. Importantly, our approach also helps bring the study of North Korean politics more firmly in the mainstream of political science inquiry.
"How Taking from Foreigners Affects Domestic Human Rights." Oxford University Blavatnik School of Government Working Paper Series, BSG-WP-2015/004. Co-authored with Noel Johnston and Nicole Janz. (under review)
David Hume and the founders of the market economy argued that it is critical for a government to protect the property rights of its citizens. It is unclear, however, if this applies to foreign-owned property as well. By international law, an expropriation (i.e. involuntary seizure of foreign-owned assets) is only legal if undergone for a public purpose. Government leaders often attest this is the case. But in reality, does seizing assets of foreigners typically benefit the public? We argue that it does not. This project brings together two literatures in political science, and is the first to rigorously analyze the consequences of international expropriations for domestic political, economic and labor rights. Using case studies and a variety of statistical tests, we argue that, while expropriations create short-term windfall profits for a government, they may do overall damage to the public good by chasing away welfare-enhancing investors and creating revenue for government repression. This article is an appeal to those who take for granted the welfare implications of international investment policies. It suggests that any major reconsideration of the investment regime must also consider how it affects people on the ground. Without scholars and policymakers asking these questions, it will be difficult to fully address the bigger question of the optimal design of an international investment regime.
For more than a decade, countries have been urged to abolish subsidies for fossil fuels— particularly gasoline and diesel—to reduce carbon pollution, cut wasteful spending, and generate other health and environmental benefits. After years of climbing subsidies, since 2014 many governments have announced sharp reductions in gasoline subsidies. We assess these reforms using an original data set of monthly gasoline prices, taxes, and subsidies, covering 157 countries from 2003 to 2017. Our data show that from July 2014 to April 2017, consumer subsidies fell dramatically. But it was not the victory for climate change policies it might seem at first: about three-quarters of the subsidy decrease came from falling international oil prices, not policy reforms. Some countries announced reforms but never implemented them; others implemented reforms but later reversed them, or saw them eroded by inflation or falling exchange rates. We show that the fall in subsidies is unlikely to bring about most of the anticipated environmental benefits, including reduced carbon emissions. Both scholars and policy advocates should refocus their efforts on a broader range of reforms, affecting a wider range of countries, which we believe are more likely to reduce carbon pollution.
Does the absence of taxation lead to a lack of representation? The answer to this question is at the heart of decades of scholarly work on natural resource politics that links resource rents to the resilience of anti-democratic institutions. One microfoundation underpinning this mechanism is that taxes strengthen citizen demands for government accountability, whereas rents weaken such demands through the distribution of state-provided goods and hand-outs. I look to the next sequential step in this mechanism by shifting the focus from citizens to how leaders behave differently when taxes are replaced with resource wealth. In the context of Alaskan state politics, I show that the decision to repeal state taxes in 1980 and to distribute unconditional oil-to-cash transfers starting in 1982 prompted a decline in government responsiveness. These findings bear theoretical implications for the study of natural resource politics and the broader study of the determinants of representative government.
An emerging solution by international NGOs to the so-called 'resource curse' -- whereby wealth derived from natural resource extraction leads to bad economic and governance outcomes -- is for governments to distribute resource revenues to citizens via direct cash transfers. Yet little is known about the impact of such unconditional transfers on politics and political attitudes. This paper leverages a natural experiment in 1976 Alaska to find that oil-to-cash transfers diminish participation in politics. The data show that individuals receiving their transfers right before the election are roughly 16 to 20 percentage points less likely to vote than those receiving transfers right after the election. These findings bear theoretical implications not only for the study of natural resource politics but also the broader study of the political effects of unconditional cash transfers.
The presence of temporally heterogeneous effects is prevalent in longitudinal (panel) analysis in the social sciences. The effects of predictors on outcomes of interest may vary across time, often following complex patterns. Though unit heterogeneity is more commonly addressed in quantitative studies using longitudinal data, a growing body of literature has begun to directly model the presence of time-varying effects using methods such as time fixed-effects, time inter- actions, unstructured time models, structural break models, and dynamic linear models. This study considers an alternative approach that allows researchers to answer questions regarding (1) temporally heterogeneous effects and (2) how these effects are clustered over time. Using the debate surrounding the presence of a resource curse (Ross 2012) as an example, we apply a Bayesian mixture modeling (BMM) framework to address time-varying effects of oil wealth on democratic governance. Results indicate that the BMM approach provides evidence for the presence of a resource curse for the periods 1960-1987 and 1995-2003, with null effects in the 1987-1990 period and positive effects in the 1991-1994 era. The advantage to the BMM frame- work, we argue, is the lack of ad hoc temporal modeling which can often lead to high model dependence; instead by using a data-based approach to temporal clustering, we flexibly allow for hypotheses of theoretical interest to be tested against the data rather than be assumed by the model.
How do political leaders distribute discretionary revenue? In this paper we use evidence from Peru to show that President Alan Garcia opportunistically distributed natural gas revenues to improve his political legacy among Peruvian voters. Our findings support the claim that Garcia had lasting office-seeking, as opposed to policy-seeking, motivations for resource allocation. Our findings have substantive implications for leaders in resource-rich states contemplating the decentralization and subnational distribution of natural resource revenues.
"Recommendations on the Draft Lebanese National Oil Company Bill" (email for a copy). Report prepared for the Lebanese Parliamentary Committee on Public Works, Transportation, Energy, and Water. 10 January 2018.
"Oil Conflict and Kurdish Independence." Global Policy. 4 October 2017. (with Morgan Bazilian, PeriKhan Aqrawi-Whitcomb, and Cyril Widdershoven)
"How to get reelected if you are an Iranian MP." The Washington Post / Monkey Cage Blog. 13 August 2015.
"Will Iran's parliament block the nuclear deal?" The Washington Post / Monkey Cage Blog. 14 April 2015.
"Oil and Politics in Iran's Majles-e Shura-ye Eslami." The International Society for Iranian Studies Newsletter. vol. 34, no. 4 (October 2014), pp. 10--13.
"Reforming National Oil Companies: Nine Recommendations." Natural Resource Governance Institute Briefing. July 2014. (with Patrick Heller and Johannes Schreuder)
"The Petroleum Industry Bill and the Future of NNPC." Revenue Watch Institute Briefing. October 2012. (with Aaron Sayne, Patrick Heller, and Johannes Schreuder)
"The Future Impact of Climate Change on the California Wine Industry." Stanford International Policy Studies Report, prepared for California State Assembly Member Noreen Evans. May 2009. (with Jonathan Gatto, Byung-oh Kim, Hirochika Namekawa, and Hung Tran)