Resource rents and populism in resource-dependent economies

ELENA SEGHEZZA, GIOVANNI B. PITTALUGA

EUROPEAN JOURNAL OF POLITICAL ECONOMY

Abstract: A usual explanation for populism is the existence of bad institutions, with an autocratic regime dispelling opposition by distributing income to the ‘masses’ in the manner of the ‘bread and circuses’ of Imperial Rome. In Bolivia, Ecuador, and Venezuela, populist redistribution occurred in conjunction with weakening of institutions. We associate populist redistribution with resource rents available in the course of the commodity price cycle. When production is predominantly natural resources, other industry interests are ineffective in opposing populist redistribution and preventing the undermining of democracy. Rather than associating populism with preexisting bad institutions as others have done, we show empirically that, in the cases we study, resource rents facilitated populism that allowed authoritarian institutions to be created.