It is clear that the presence of large oil revenues has impacted development paths in MENA and ultimately produced damaging political and social outcomes in the region; however, this is not due solely to the region’s large size of those rents. Oil rents, in conjunction with a state’s labor abundance, state capacity, and history have impacted the development of MENA.
The MENA region is known for the size of its oil rents. Population, or labor abundance, has a role in the political and social outcomes that come from a state’s oil rents. RRLP states, like those in the GCC, rely on imported work (rentier effect). Thus, the state makes high oil revenues without having to tax its citizens. Since states are not taxing their citizens, they are less inclined to provide services that benefit their people (no representation without taxation). Additionally, much of the income from oil profits are being exported to workers’ home countries, in remittances, ultimately restricting the states’ citizens from ever seeing the revenue that is being generated. Thus, labor abundance and the rentier effect can result in damaging political and social outcomes by slowing societal development and fostering the rise of authoritarianism.
State capacity also impacts the development of states in MENA. RRLA states do not have as much capacity as RRLP states and have thus performed worse in areas of economic development, rule of law, and societal development. RRLA states, rather than investing in the private sector and rising middle class, have invested their profits in repressive apparatuses used to maintain control. These are the same states that experienced the Arab Uprisings in 2010-2011. Thus, there is a correlation between oil rents, labor abundance, state capacity, and their resulting political and social outcomes.
Finally, history has impacted development in MENA. RRLP countries like those in the GCC were lightly impacted in the colonization and rule of both the Ottoman and European empires. Thus, they have had a relatively more stable economy and society. This is also due to the fact that they are newer states. On the other hand, states like Iraq and Algeria have exhibited weak post-independence state institutions that have led to damaging political and social outcomes.
The resource curse implies that states rich with natural resources have less economic growth and democracy. Although this may appear true, it is also important to consider the relationship that oil rents have with labor abundance, state capacity, and history. All of these factors combined together affect states’ economic, political, and social development and its people’s relationship with the state.
Cammett, Melani. A Political Economy of the Middle East. Available from: MBS Direct, (4th Edition). Taylor & Francis, 2018.