Deep Determinants of Corruption? A Subnational Analysis of Resource Curse Dynamics in American States

• Author: Patrick Egan,Aaron Schneider,Michael Tyburski
• DOI: 10.1177/1065912919878264
• Published date: 01 March 2020
• Date: 01 March 2020

https://doi.org/10.1177/1065912919878264

Political Research Quarterly

2020, Vol. 73(1) 111 –125

© 2019 University of Utah

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DOI: 10.1177/1065912919878264

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Article

Does revenue from natural resource extraction increase

corruption? The substantial resource curse literature dem-

onstrates that this source of unearned government reve-

nue has harmful effects in certain institutional settings.1 If

two states, one with “strong” institutions and another

with “weak” institutions, experience resource windfalls,

we may expect deleterious outcomes only in the latter.

This understanding of resource curse dynamics suggests

that the international community encourage governments

that struggle with mineral wealth management to develop

institutional restraints and promote transparency, such as

Chile’s fiscal rules or Botswana’s commodity funds

(Hendrix and Noland 2014; Limi 2006). This advice is

supported by a well-developed literature.2 Yet, unsuc-

cessful reforms and backsliding remind us that even well-

intentioned governments can fail to curb corruption. Does

mineral wealth account for this observation?

We offer a complementary, but theoretically distinct,

explanation for the observed relationship between natural

resource–derived revenue and the misuse of public office

for private gain.3 Rather than promote a causal relation-

ship conditioned by institutions, we assert that state-

dependence characterizes the resource curse best. It is

well known that some individuals or groups that experi-

ence an event are more likely to experience it again, all

else equal (Heckman and Borjas 1980). However, there

are two possible explanations: unit-heterogeneity and

state-dependence.

An analogy to addiction helps to elucidate our

approach. Some young adults who experiment with alco-

hol subsequently become alcoholics. A unit-heterogene-

ity explanation would assert that their fundamental

probability of alcohol dependency differs from others.

The consumption of alcohol does not alter this character-

istic. Such an understanding of alcoholism might lead one

to look for a genetic predisposition in the afflicted. A

state-dependent argument, by contrast, would suggest

that consuming alcohol in excess as a youth might mean-

ingfully alter the likelihood of consuming alcohol in

excess habitually.4

States are not individuals with genes, but comparative

political research suggests that this metaphor fits. With

respect to the determinants of corruption, unit-heteroge-

neity often points to differences in cultural attributes,

deep-seated social norms, or the nature of predominant

religious orientations to explain variation (Jong-Sung and

Khagram 2005; Paldam 2002). State-dependence instead

emphasizes the consequences of the initial choices made

878264PRQXXX10.1177/1065912919878264Political Research QuarterlyTyburski et al.

research-article2019

1Kansas State University, Manhattan, USA

2Tulane University, New Orleans, LA, USA

3University of Denver, CO, USA

Corresponding Author:

Patrick Egan, Tulane University, 316 Norman Mayer Building, New

Orleans, LA 70118, USA.

Email: pegan1@tulane.edu

Deep Determinants of Corruption?

A Subnational Analysis of Resource

Curse Dynamics in American States

Michael Tyburski1, Patrick Egan2, and Aaron Schneider3

Abstract

Drawing on comparative resource curse literature and American literature on the determinants of corruption,

we argue that the impact of natural resource extraction on corruption outcomes is state-dependent. That is, in

environments where corruption is already high, natural resource windfalls allow political actors and economic elites to

take advantage of state brokerage, further increasing corruption. However, in previously less-corrupt states, increased

natural resource extraction will not induce corruption. We rely on hierarchical linear models to interpret federal

corruption convictions data for the fifty American states between 1976 and 2012 and employ generalized method of

moments estimators to account for potential endogeneity. The findings are robust to alternative specifications and

have implications for the management of new resource extraction opportunities.

Keywords

corruption, resource curse, state-dependence, subnational analysis