Oil rent, the Rentier State/Resource Curse Narrative and the GCC Countries

• Published date: 01 June 2017
• Author: Emilie Rutledge
• DOI: http://doi.org/10.1111/opec.12098
• Date: 01 June 2017

Oil rent, the Rentier State/Resource Curse

Narrative and the GCC Countries

Emilie Rutledge

Associate Professor, Economics, College of Business and Economics, UAE University, Al Ain, United Arab

Emirates. Email: e.rutledge@uaeu.ac.ae

Abstract

Despite the fact that ‘rent’underpins both Rentier State (RS) and Resource Curse (RC) theses,

external factors that help shape perceptions of it and determine its value, are rarely factored in. The

purpose of this article is to suggest reasons for this shortcoming and, with particular reference to

the ‘archetypal candidate’Gulf Cooperation Council countries, question the utility per se of the

RS/RC paradigm (RS outcomes can only manifest within RC contexts). To explain the default and

long-standing utilisation of the construct across the social sciences—in spite of the frequent need to

detour around contrary data—this paper points firstly to the way in which rent is now popularly

perceived (from logically grounded, to excessively unwarranted) and secondly, to the fact that ‘oil’

lies at the paradigm’s heart. It is a commodity that various Western polities once had unfettered

control over; no other depletable natural resource in the past century has held such global

economic significance (external actors clearly have a vested interest). Lastly, to underscore the

need for a reappraisal of the RS/RC analytical framework, some data are presented that

demonstrate that the GCC countries have not, comparatively speaking, suffered the deleterious

consequences that the paradigm stipulates.

1. Introduction

The purpose of this paper is to suggest that because rent derived from oil—‘oil rent’—is

central to both the Rentier State and Resource Curse (RS/RC) schools of thought (see

Fig. 1, below), many of those who use it as conceptual and analytical framework will,

unwittingly perhaps, view the GCC countries in a more value-laden way than if the

commodity in question were the cocoa or coffee bean. The contention is this: Western

industrialised world economies once had largely unfettered access to developing world

oil and, as a consequence, benefited in a multitude of ways from cheap-at-source oil. It

follows that it will have continued to be in their geostrategic interest to seek ways of

retaining control over rent setting following the developing world’s resource national-

isations of the 1960s and 1970s. Therefore, if a causal link could be established between

high oil rents on the one hand and adverse developmental effects for the host countries

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on the other, then the oil-rich developing countries may be more inclined to accept a

form of payment mechanism other than ‘ground rent’alongside the freer participation of

external agencies (e.g. Western IOCs).

This paper will also suggest that the RS/RC narrative, particularly in relation to oil

rent is profoundly ahistoric. Conceptual issues arising out of the category of rent itself,

have come to result in oil rent having rather pejorative associations. The paper will chart

how ‘rent’was utilised by both the Classical economists and the Neo-Classicals, and

resulted in notions of resource rent being somehow excessive and unwarranted which, in

turn, led to the demonisation of what this article refers to as ‘landlord’oil and gas states

whose legitimate role in a world capitalist economy is logically to maximise the rent they

receive from their national property. In relation to this, the ramifications of the resource

Figure 1 Rentier state’theory within the ‘Resource Curse’construct.

Notes:

a

For oil rent, see in particular, Mommer (2002) and Noel (2002) and for the

external factors and key actors, see Rutledge (2005).

b

Key ‘rentier state’expositions

include: Amuzegar (1982), Beblawi and Luciani (1987) and Gibas (2006), the ‘rentier

mentality’is discussed by both Beblawi (1990) and Minnis (2006); counterpoints

include: Fandy (2004), Hertog (2010), Ramady (2012) and Springborg (2013).

c

For the

‘resource curse’, see in particular Amuzegar (1982), Gelb (1988), Auty (1990), Sachs

and Warner (1995, 2001), Karl (1997) Collier and Hoeffler (1998), Friedman (2006) and

Ulfelder (2007); counterpoints relating to economic performance include Lederman and

Maloney (2007) and Wick and Bulte (2009) for sociopolitical outcomes, consider

Basedau and Lay (2009).

©2017 Organization of the Petroleum Exporting Countries OPEC Energy Review June 2017

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