Analysis of the Interactive Effects of Good Governance and the Rentier state on the Political Instability of OPEC Member States by GMM

اقتصاد و توسعه منطقه ای

Article 7, Volume 27, Issue 19, June 2020, Pages 165-196   

Document Type: مقالات پژوهشی

DOI: 10.22067/erd.2021.18817.0

Authors

Nejat Mohamadifar^{* 1}; Behrouz Sadeghi amroabadi²

¹Associate Professor, Department of Political Sciences, University of Ardakan, Ardakan, Iran

²Assistant Professor of Economics, Shahid Chamran University of Ahvaz,, Ahvaz,, Iran

Abstract

Extended Abstract
Introduction
One of the most important concerns of political and social thinkers over the centuries has been the determinants of political stability. A society is considered to be fully developed and stable when, in addition to economic development, it is also developed in the social and political fields, enabling citizens to evolve in a harmonious way. By using revenues from the abundance of natural resources, rentier governments can overcome challenges such as low economic growth, poverty and accountability, corruption and the lack of the rule of law, and ensure their political stability. On the other hand, good governance is an important factor in the economic and social development of countries and its promotion leads to more open and democratic societies. Given these issues, the main question of the present study is what effect does the interaction of good governance and the rentier government have on the political instability of OPEC member countries? This article argues that revenues from energy exports and good governance can bring political stability to OPEC member countries.

Theoretical frame work
The rentier government curses the resources and the impact of rents on social, economic, and political life in resource-rich countries. To analyze this issue, Michael Ross (Ross, 2001) provides a framework which argues that the effects of the rentier government can be classified into three groups: 1) The effect of rentier: Based on Ross's argument, this can be claimed that resource-rich governments tend to use rents to reduce social pressure and in this way they gain more independence from the public (Ross, 2001: 329). He also stated that the behavior of the rentier government can be explained in three ways: A) The effect of taxation b) The effect of cost c) The effect of group formation. 2) The effect of repression: rent revenues allow governments to do this to strengthen its power and thwart democratic aspirations, spend more on internal security. In addition, supporting resource extraction is crucial for rentier governments, so investment in security apparatus is likely to be made to protect these resources.
Richard Auty was the first researcher to introduce the "resource curse" theory. This theory states that based on new evidence not only many resource-rich developing countries do not enjoy the benefits; They may, in fact, perform worse than less gifted countries (Auty, 1993: 77-78). In addition, the research of Sachs and Warner On analyzing the economic performance of resource-rich countries during the years 1970-1989, It paved the way for a dramatic increase in resource curse studies. As a result, their study showed that there is a causal relationship between the intensity of natural resources and economic growth (Sachs & Warner, 1995: 6398).

Methodology
The hypothetical test method in the present study is the dynamic panel data method (GMM) during the period 2010 to 2018. In this study, six components of Control of Corruption, Government Effectiveness, Regulatory Quality, Rule of Law, Voice and Accountability, and Political instability/No Violence & Terorism have been used as indicators of good governance and with oil (rent) revenues on the political instability index has been examined separately. Research data gathered from the Institute for Political Risk Services and World Bank data (WDI 2020) for OPEC countries. In addition to checking for the lack of colinearity between the independent variables entered in the model, tests related to normal residuals, homogeneity of variances, the independence of the residuals and the absence of model specification error (linearity of the model) were also performed.

Results & Discussion
According to the coefficient of determination indicates a good fit of the pattern and the variables used in it show the explanatory power of the model by 63%, which is a good number considering that the method used is panel data. Durbin Watson's statistic also shows no autocorrelation and shows the number 1.8. The F-statistic in this fit also denies that the coefficients are zero. The sign of coefficients is all presented in accordance with theory and theoretical foundations. The j-statistic statistic is the same as the Sargan statistic used to test the correlation between residuals and instrumental variables. The findings of this study show that the effect of the rentier state variable on the political instability index of OPEC countries is positive and significant, and the effect of accountability indicators, government efficiency, corruption control, rule of law and no-violence as indicators of good governance in OPEC countries are negative and significant on the political instability index.

Conclusions & Suggestions
According to Ross, the legitimacy of rulers through rent instead of free elections causes So that rentier governments can invest more of their revenue in sponsor networks to prevent the emergence of democratic demands of citizens. Ross believes that rentier governments tend to form follow-up support groups to prevent the formation of social groups independent of the government. In other words, opposition to the status quo or independent social groups is likely to be suppressed by governments, because they are seen as a threat to the existence of their governments that this leads to the political instability of the regime. Interactive effects of the three indicators of accountability, corruption control and the rule of law along with the rentier state on the political instability index of OPEC countries is negative and significant.

Keywords

Rentier state; Good governance; Political stability; OPEC

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