Leaders Matter

Perhaps the possibly pernicious effects of oil are simply explained by looking at human greed.  Machiavelli and Montesquieu gave theoretical arguments explaining the sloth of wealthy political elites.  A more contemporary notion is of the myopia that oil wealth can cause, that it creates wishful thinking and an unrealistic tendency to optimism in leaders. Rationalists would refer to leaders as utility-maximizers who engage in rent-seizing precisely because their understanding of how oil wealth operates allows them to. Long-term planning is difficult in resource-rich but weak countries because politicians with an uncertain hold on power will spend to the max to improve their standing at the polls, and to ensure they do not leave any financial or political opportunities for the next elected official (See: Humphreys, Sachs, & Stiglitz, 2007). In turn, natural resource wealth can serve to consolidate particular regimes in power, making it seem necessary for opposition groups to pursue power through extra-constitutional means so they can get their rewards. Thus oil would result in the entrenchment of ineffective and corrupt leaders in place who contribute to poor governance.

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One response to “Leaders Matter

  1. Pingback: Nigeria’s new Sovereign Wealth Fund: Just another way to shuffle money about? | Niger Delta Politics

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