Oil Is Not a Curse: Ownership Structure and Institutions in Soviet Successor States
By Pauline Jones Luong,Erika Weinthal
Cambridge University Press, 2010, 444 pp.
More often than not, so a popular theory goes, oil-rich countries are doomed to economic stagnation, growing inequities, and domination by self-aggrandizing authoritarian elites. Not so, argue Jones Luong and Weinthal. A great deal of venerated theory, they claim, has erred by generalizing from trends during one historical era (1970-90) and, in particular, by overlooking a critical intermediate factor -- the nature of resource ownership. In the end, whether a well-endowed country has a government that pursues policies promoting fiscal integrity, long-term growth, and a more equitable distribution of economic benefits depends on who owns and manages the oil and gas. Of the four types of ownership the book identifies, that in which the bulk of the oil or gas is under private title and management does the best, and the type in which the state displaces both private and foreign investors does the worst. The other two types, those with either a dominant role for foreign firms or with a division between state ownership and private management, fall in between, the former being better than the latter. The authors use the five post-Soviet states blessed with hydrocarbons but having different ownership models (Azerbaijan, Kazakhstan, Russia, Turkmenistan, and Uzbekistan) to make their case -- a case laid out in a rigorous yet lucid fashion.