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The Oil Nouveau-Riche and Arms Imports (English)

Countries that strike it rich when exploring for oil and gas often fail to see growth materialize. This paper shows that one way things can get messy is via squandering new wealth, based on future resource revenues, on arms imports. In the five years following a giant oil or gas discovery, arms imports increase by 25 percent. The effect is even larger, at 51 percent, when the price of oil is as high as $80 per barrel. These estimates can be interpreted causally as the timing of giant oil discoveries is unpredictable due to the uncertain nature of exploration.

Details

  • Author

    Vezina,Pierre-Louis

  • Document Date

    2020/09/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9374

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Africa,

    World,

  • Region

    Africa, The World Region,

  • Disclosure Date

    2020/09/01

  • Disclosure Status

    Disclosed

  • Doc Name

    The Oil Nouveau-Riche and Arms Imports

  • Keywords

    oil-importing countries; oil-importing country; oil price; long-run growth; Oil and Gas; Oil & Gas; import share; share of import; high oil price; Curse of Oil; cost of import; Research Support; measure of corruption; supply of oil; barrel of oil; development of nations; oil price level; net present value; cross country evidence; natural resource extraction; human rights condition; price of oil; standard error; import increase; arms transfer; arms trade; oil discovery; Natural Resources; Resource Curse; political repression; baseline regression; foreign invasion; gas discovery; Regional Studies; subsequent years; robustness check; import surge; Civil War; health expenditure; state spending; public money; military expenditure; weighted average; vertical line; recoverable oil; oil producer; foreign policy; open economy; corrupt countries; news reports; data availability; democratic country; oil supply; democratic accountability; barrel cost; recent experiences; study period; resource rent; state capacity; average distance; baseline model; debt crisis; military ship; political instability; border countries; import data; oil revenue; country accounting; onshore oil; recent studies; rebel group; Political Economy; oil import; nonlinear model; sale price; manufacturing good; customs datum; data coverage; resource economist; trade statistic; regression table; development policy; open access; counterfactual analysis; resource revenue; arms race; small arms; global factor; raw data; geographic dispersion; rebel base; rocket launcher; reconnaissance satellites; military spending; Political Violence; oil exploration; conventional weapon; democratic institution; investment increase; business cycle; resource wealth; political force; production cost; oil curse; oil company; oil companies

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Citation

Vezina,Pierre-Louis

The Oil Nouveau-Riche and Arms Imports (English). Policy Research working paper,no. WPS 9374 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/302681598970589744/The-Oil-Nouveau-Riche-and-Arms-Imports