Power Grab: Political Survival Through Extractive Resource Nationalization
Cambridge University Press, 2020.
For rulers whose territories are blessed with extractive resources -- such as petroleum, metals, and minerals that will power the clean energy transition -- converting natural wealth into fiscal wealth is key. Squandering the opportunity to secure these revenues will guarantee short tenures, while capitalizing on windfalls and managing the resulting wealth will fortify the foundations of enduring rule. This book argues that leaders nationalize extractive resources to extend the duration of their power. By taking control of the means of production and establishing state-owned enterprises, leaders capture revenues that might otherwise flow to private firms, and use this increased capital to secure political support. Using a combination of case studies and cross-national statistical analysis with novel techniques, I sketch the contours of a crucial political gamble: nationalize and reap immediate gains while risking future prosperity, or maintain private operations, thereby passing on revenue windfalls but securing long-term fiscal streams.
"Unintended consequences of anti-flaring policies--and measures for mitigation"
Proceedings of the National Academy of Sciences. vol. 117, no. 23 (June 2020), pp. 12503-12507. Co-authored with Raphael Calel.
Oil reservoirs contain significant quantities of methane, which leak out when the oil is extracted. At oil wells around the world, over 140 billion cubic metres (bcm) of this methane is just burned off (flared) every year, transforming it into carbon dioxide which contributes to global warming. Just as much gas is released directly as methane (vented), which makes as much as a 16-fold contribution to global warming. Together, flaring and venting annually waste 8% of global natural gas production and contribute 6% of global greenhouse gas emissions. Capturing and using this gas would be a pro-development, cost-effective means of reducing greenhouse gas emissions. But international efforts to address this problem have largely focused on regulations to curb flaring. We show that these regulatory solutions appear to be mostly ineffective, however, and run the risk of being seriously counterproductive: since flaring is much easier to detect than venting, they risk pushing oil producers towards greater venting. Even a small increase in venting is enough to create a net increase in global warming. We argue that a more effective approach would focus on gas infrastructure programs financed through production taxes, and the development of remote sensing techniques for detecting point-source methane emissions that would permanently solve the monitoring problem.
"Institutions and the Resource Curse: Evidence from Cases of Oil-Related Bribery."
Comparative Political Studies. vol. 53, no. 1 (January 2020), pp. 3-40.
While some resource-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 resource extraction is governed. Some governments grant procurement authority -- the ability to award contracts for production rights -- to state-owned enterprises, while others place this authority in ministries. Building upon agency theory, I argue that this choice matters: the relative political autonomy of state-owned enterprises 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 corruption and regulatory independence.
"Dynamics of the inner elite in dictatorships: Evidence from North Korea."
Comparative Politics. vol. 52, no. 2 (January 2020), pp. 221-249. Co-authored with John Ishiyama.
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 North Korea. Given challenges in collecting individual-level data in this context, we employ web-scraping techniques that capture inspection visits by the dictator as reported by state-run media to assemble network data on elite public co-occurrences. We test the durability of this network since Kim Jong-un's rise to power in 2012 to find suggestive evidence of elite purging. Our findings contribute to the broader literature on authoritarian elite dynamics and to subnational studies on power-sharing in communist states. Importantly, our approach helps bring the study of North Korean politics more firmly in the mainstream of political science inquiry.
"Scraping public co-occurrences for statistical network analysis of political elites."
Political Science Research & Methods. vol. 7, no. 2 (April 2019), pp. 385-392.
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.
Peer-reviewed book chapters
"Governance Amid the Transition to Renewable Energy in the Middle East and North Africa." 2021. In Robin Mills and Li-Chen Sim (eds.), Low Carbon Energy in the Middle East and North Africa (London, UK: Palgrave Macmillan, International Political Economy Series). Co-authored with Noosha Uddin, UCSB PhD student.
While some states in the Middle East and North Africa have pursued renewable energy policies, others have doubled-down on conventional fossil fuels and eschewed the development of renewable energy. What explains this variation? What implications do these choices have on domestic and international politics? Drawing on theories from political science and the political economy of development, we explore the transition from conventional to renewable energy in the Middle East and North Africa (MENA) region. We consider the impact of decarbonized, diversified economies on demands for inclusive governance and democratic institutions. First, we argue that the renewable energy transition will diffuse existing and future societal pressures by increasing youth employment, hindering corruption, and reducing fiscal volatility. Compared to the concentrated political economy of petroleum-reliant states, we posit that the up and coming renewables sector provides an opportunity for states to broaden and diversify their sources of economic and international political power. Second, we build theoretical expectations that fiscal reliance on oil exports and government time horizons explain variation in renewable energy policies in the MENA. We conclude with potential scenarios for how the transition will affect fiscal and political stability.
"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.
"Expropriation and Human Rights: Does the Seizure of FDI Signal Wider Repression?" Co-authored with Noel Johnston and Nicole Janz. (R&R, Review of International Organizations)
Is expropriation - the seizure of assets from foreign investors - a sign of wider repression in host countries? If so, under which circumstances? The relationship between expropriation and repression has been under-explored in the human rights and international political economy literatures. We argue that domestic repression and expropriation are interrelated: both can be part of a state's repertoire of coercive activities, reflecting a leader's insecurity about their power position. Expropriation, however, often attracts widespread media attention, and thus may signal wider repressive acts against citizens, which are typically more difficult to detect. We present an exploratory analysis using a cross-country sample of seventy-eight non-OECD countries (1960-2006). Results show that expropriation is connected to higher repression and that the effect is stronger in countries with higher baseline human rights protection, which are in the middle of the democracy-autocracy spectrum. Our theoretical and empirical contributions illuminate the relationship between property rights and human rights, and give important insights to understanding state incentives to repress.
"Why Do Governments Tax or Subsidize Fossil Fuels?" CGD Working Paper 541. Co-authored with Michael Ross and Cesar Martinez Alvarez.
Why do some countries take strong measures to reduce their greenhouse gas emissions while others do not? This question has been remarkably difficult to answer, partly because climate change policies are hard to measure in ways that are comparable across countries and over time. We focus on policies that encourage or discourage the use of fossil fuels, which are the source of more than three-quarters of the world's anthropogenic carbon pollution. Using original high-frequency data on gasoline taxes and subsidies in 157 countries, we establish four findings: almost half of the country-to-country variation in policies can be explained by just two economic factors, income and fossil fuel exports; national political factors, including regime type, elections, government effectiveness, and leadership appear to play no role; policy changes were overwhelmingly a function of local, country-specific factors; and despite rising alarm about the climate crisis, from 2003 to 2015 there was little net change in fuel taxes. These same patterns hold for diesel, the other major transportation fuel. We argue that these features are consistent with a model in which fossil fuel taxes and subsidies are driven by a combination of macro-level economic factors and micro-level political action. If valid, this model would have important implications for understanding and mitigating greenhouse gas pollution.
"Transition, Hedge, or Resist? Understanding Political and Economic Behavior toward Decarbonization in the Oil and Gas Industry ." Co-authored with Jessica Green, Jennifer Hadden, and Thomas Hale. (R&R, Review of International Political Economy).
Many oil and gas firms are announcing plans to go green. But are they actually walking the talk? We analyze both the political and economic behavior of privately-owned oil majors to understand the degree to which they are decarbonizing. We collect a wide range of firm-level data from 2004 to 2019, including a novel measurement of political behavior based on original coding of corporate earnings calls. Our analysis yields four main findings. First, firms' political and economic responses to decarbonization are distinct processes, which are not necessarily correlated. Second, not a single firm is shifting away from fossil fuels during the time frame studied. Changes in business behavior have been relatively modest in scope. The most ambitious firms are engaging in hedging -- mitigating risk through diversification rather than moving toward decarbonization. Third, major oil and gas firms are improving along political indicators between 2010 and 2018. Finally, firms that have progressed further towards decarbonization tend to be located in or sell their products in jurisdictions with more stringent environmental regulation, have smaller refining sectors, and be involved in more industry coalitions. Our findings showcase the analytic value of a two-pronged political economy approach to the study of multinational firms.
"Using Earnings Calls to Understand the Political Behavior of Major Polluters." Co-authored with Jessica Green, Jennifer Hadden, and Thomas Hale. (R&R, Global Environmental Politics).
A core research interest of global environmental politics is the role that private actors play in accelerating or preventing progressive climate policy and true decarbonization. Yet, scholars have struggled to measure the political behavior of multinational firms due to lack of transparency about their activities and inconsistency in reporting requirements across jurisdictions. In this research note, we present a new data source -- firm earnings calls -- that scholars might use to better understand the political behavior of major multinational polluters. To illustrate the value of earnings calls as a data source, we construct an original dataset of all earnings calls from major oil and gas firms between 2005 and 2019. We then code these transcripts, demonstrating that although firms can be classified as more or less pro-climate, there is little evidence of the industry's public acceptance of decarbonization. These unique data could permit researchers to explore important questions about climate politics, the evolution of private governance, and the relationship between policy and firm political behavior. We conclude by suggesting extensions of our approach, including other multinational industries that are amenable to this type of analysis.
"Understanding the impacts of cash transfers on individual political behavior" (formerly titled, "Direct cash transfers and political participation.")
The effects of increased personal income on voter turnout are well documented in political science research. There is little consensus, however, about the specific effects of increased unearned income -- money that individuals receive regularly from non-employment sources, such as government-paid cash transfers. Economic voting theories suggest that any increase in disposable income prompts greater political participation. By contrast, rentier theories posit an acquiescence effect, such that unearned income transfers will suppress civic engagement. This paper proposes a new framework based on political autonomy from the state: individuals receiving unearned income use this windfall to withdraw from public services, thereby removing a key state-citizen linkage that motivates voter participation. This paper leverages a quasi-experimental assignment of cash transfers, individual-level administrative voter data, and a contemporaneous historical survey in 1976 Alaska to test the argument. Individuals receiving oil-to-cash transfers as-if randomly right before an election are roughly 20 to 27 percentage points less likely to vote than those receiving transfers right after the election. These findings bear theoretical implications for the broader study of civic engagement and the political effects of unearned income.
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.
"Coordinated Financial Rescues." (with Christina Schneider and Jennifer Tobin)
When debtor countries are in financial distress, exposed creditors face a dilemma. Even though they want to lend more to the debtor to minimize losses on their existing claims, they fear that their efforts alone are insufficient to prevent default of the debtor country. Why then do creditors increase their exposure to distressed debtor countries if they lack the capacity to close the financing gap individually? Whereas previous work has analyzed creditors' lending decisions in isolation from each other, we argue that creditors' lending decisions are inherently interdependent. The potential for significant losses across creditor groups provides incentives for informal coordination to address these concerns. If other creditors are willing to coordinate, the perceived risks of lending decline. Creditors become less concerned that they will lose their existing claims. As a consequence, individual creditor's decisions to provide loans or debt relief are conditioned not only on their own exposure to the debtor, but also on the likelihood that the debtor receives support from other sources. We use a stochastic actor-oriented model to analyze how networks of financial rescue strategies of four central creditor groups to over 100 debtor countries co-evolve between 1990 and 2010. We find that creditors' decisions to offer financial support depend on the decisions of other creditors. They highlight that informal coordination across creditor groups plays a central role in international financial rescues.
"Oil companies aren't actually going green--but some are heading there faster than others." 2020. The Washington Post / Monkey Cage Blog. (with Jessica Green, Jennifer Hadden, and Thomas Hale)
"Stop Oil Production in Santa Barbara Once and for All." 2020. Santa Barbara Independent.
"Power Grabs and Crude Decisions.'' Invisible Histories caption essay, Harvard Center for History and Economics. June 2020.
"New Oil Finds Could Mean a Tripling of Guyana's GDP." Foreign Policy. 26 November 2019. (with Morgan Bazilian)
"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.
"Four things to know about nationalizations in the energy industry." 2017. Initiative for Sustainable Energy Policy (ISEP) Blog.
"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)