DRI Working Paper No. 101
By Oeindrila Dube, and Maria Carreriy
Do natural resources impair institutional outcomes? Existing work studies how natural resources influence the behavior of leaders in power. We study how they influence who comes to power. Our analysis focuses on oil price shocks and local democracy in Colombia, a country mired in civil conflict. We find that when the price of oil rises internationally, legislators affiliated with right-wing paramilitary groups win office more in oil-producing municipalities. These effects are larger in conflict-ridden locations, where armed groups are poised to intervene in local elections. Consistent with such intervention, positive price shocks also reduce electoral competition: fewer centrist candidates run for office, and fewer centrist legislators are elected to office. In essence, there is diminished representation at the center. Our findings highlight how natural resources undermine democracy by distorting elections, and suggest that conflict leaves the political sector vulnerable to the resource curse.