Natural tural reso esourc rces, es, el electo ectoral ral beh - - PowerPoint PPT Presentation

Natural tural reso esourc rces, es, el electo ectoral ral beh ehaviour viour and social ial spendi ding ng in Latin in America rica

Miguel uel Niño-Zaraz arazúa, úa, UNU-WID WIDER R (with T. Addison, UNU-WIDER and JM Villa, IDB)

Ove verview view

• Background
• The model
• Data
• Empirical approach
• Results
• Concluding remarks

Back ckgroun ground

• Latin America witnessed an important democratization process since the late 1980s

and early 1990s (end of Cold War) that saw many countries in region moving from mili litar tary y dictator ctatorshi hips ps (Bolivia, Chile, Argentina, Brazil, Paraguay, Uruguay) and autho horitar ritarian an regime gimes (Mexico and Central America) towards more competitive political systems

• The ‘politisation’ of poverty became a feature of political processes, with civil

society more actively demanding a change in the ‘status quo’

• Over the past two decades, social

ial assistance istance has emerge erged d as a new welfare lfare paradigm adigm in the figh ght t again ainst st poverty erty and vuln lnerab erabili lity

• ty. Nearly 900 million people

worldwide currently receive income support from SA, 25% of which live in Latin America

• Governme

vernment nt spending ding on the social ial sector tors s (educ ucati ation

• n,

, health alth and soci cial al assis istance) tance) incre creas ased ed substanti tantiall ally y in LA, from 9.5% of GDP in 1990s to 14% in the first decade of the 2000s

Number of P rogrammes 180

Cumulative flagship transfer programme starts by type

160 140 120 100 80 60 40 20 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

In Kind HD-CCT Employment Categorical--‐pension Categorical--‐Other

Cumulative flagship social assistance programmes by type

• Understanding the underlying mechanisms that drive redistribution

decisions of NRR is critical for the development trajectories of resource- rich countries

• The use of tax reven

enues ues is subject ject to stro rong nger er press ssures res than non-tax ax reven enues ues, especially when non-tax revenues are determined by a windfall

• f NRR.
• Collier and Venables (2010) and Collier (2010) suggest that the

reductio ction in accoun untab tability ility for the incumben umbent t that results ults from the abundan ance ce of NNR R leads ds to rent-seek eeking ing behaviou viour and patronag

• nage
• Social

cial spending, nding, as a form rm of redistrib istributio ution, can thus be a profitable fitable tool l to acco compli plish sh the political litical object ectives ives of opport rtunistic unistic incumbents umbents

Ba Back ckground ground

• While in the 1960s, 1970s and early 1980s, Latin

in Am America rican authoritar

• ritarian

ian regi gimes es used NRR RR to subsidis sidise e the impo port-sub substit stitut ution ion industriali strialisatio sation model del (Ross, 1999), since ce the 200 000s 0s NRR RR have been used, at least ast partly, ly, to expand nd soci cial al policies licies

• This coincided with favo

vourab rable le macro roecono economi mic c cond nditions itions, and a demo mocrat cratiza izatio tion n proces cess that favoured redistribution via social spending

– In Bolivia, for instance, Evo Morales’ government introduced in 2007 Renta Dignidad, a non-contributory old-age pension scheme. Before 2007, 90% of <65 year old population was unprotected to life cycle contingencies. By decree, it has been funded with a 30% tax

• n revenues from hydrocarbons = 1.1% of the country's GDP
• NRR

RR allo low w the incumbent umbent to bypass ss the interdependen erdependent t preference erence problem blem, insofar levying taxes on high income HHs is not a key element in the delivery of income transfers to the poor (Currie and Gahvari, 2008)

Back ckgroun ground

• Robinson (2010) and Caselli and Cunningham (2009) show that a windfall

dfall

• f NRR

RR leads ds to high gher er incen entives tives for r the incumb umbent ent to remain main in power wer but it also so lowe wers rs the probab bability ility of survival vival as it results in higher political competition

• Recent literature from Latin America and South East Asia (sho

hort t term m experiment erimental al and quasi si-exp experim erimental ental resea search rch design signs) s) seem to suggest that cash transfers have been politically profitable insofar they are associated with significant increases in electoral participation and favourable outcomes for the incumbent in Brazil (Zucco 2009), Mexico (De La O, 2013), Colombia (Baez et al., 2012), Indonesia (Julia et al., 2014), and the Philippines (Labonne, 2013)

• The microeconomic evidence on the subject remains contested both on

methodological and theoretical grounds (Imai, King and Velazco 2017; and Filipovich, Niño-Zarazúa and Santillan, forthcoming)

Ba Back ckground ground

• Incumbents in resource-rich countries could decide to redistribute

via direct taxation (with a high political cost) or skip accountability and opposition in the redistribution of income by allocating non-tax revenues from natural resources to social spending

• How do natura

ral l resource

• urce rent

nts s affect t socia cial l spend nding ng decisions, isions, and how these decisions influence the ‘electoral returns’ to the incumben umbent?

Ba Back ckground ground

Model del: : NR NRR and nd el elec ector toral al be beha haviour viour

• We develop a model here left- and right-win politicians interact with liberal

and conservative voters in a two periods framework

• In the first period, politicians signal their tax policy, while in the second

period, the winning incumbent does not have the same redistributive incentives as in the first period. Thus, a tax policy licy stand d may y be modifi dified ed by the presenc sence e of NRR RR that does s not affect ct voters ers dispo posable sable income

• me
• Voters’ characteristics are given by 𝑥, 𝜀 in which wealth, 𝑥, varies in the

range 𝑥, 𝑥 . The parameter 𝜀 is defined by two political ideologies: 𝜀𝑑 for conservatives that reject redistribution via direct taxes and 𝜀𝑚 for liberals who have higher preferences for taxes and redistribution.

• Information on 𝑥 is public, while information on 𝜀 is private

Mod

• del:

el: NR NRR and nd el elec ectoral toral be beha haviour viour

• Left- and right-wing candidates are denoted by 𝑥𝑀, 𝜀

𝑘

and 𝑥𝑆, 𝜀𝑙 , respectively, for which, 𝑥𝑀 < 𝑥𝑆.

• Conserv

servati ative ve voters ters will ill bear r the brunt nt of redi distri stribu bution tion via a direc rect t taxes es more re than liber beral al voters, ers, while ile none e will ll be affected ected by redi distri tribu bution tion via a NRR

• The redistribution policy is given by a linear income tax function

𝑈 = 𝛾 ∙ 𝑡𝑡𝑢, 𝑢 − (1 − 𝛾) ∙ 𝑡𝑡𝑢 where 𝒖 𝐣𝐭 a constan stant t margi ginal nal tax rate, 0 ≤ 𝑢 ≤ 1 sst sst is the per-cap capita ta social ial spend ndin ing g transfe nsfer r financed by nrr that are function of exogenous competitive commodity prices, 𝑞𝑓 , i.e. 𝑡𝑡𝑢 = 𝑡𝑡𝑢 𝑜r𝑠(𝑞𝑓 , with 𝑜𝑠𝑠′ > 0 and 𝑜𝑠𝑠′′ < 0.

Model del: : NR NRR and nd el elec ector toral al be beha haviour viour

• The incu

cumbe mbent nt can use 𝒐𝒔𝒔 to reduc uce the tax burde den n on voters ers due to incre reas ases es in soci cial al spend ndin ing, g, with the parameter 0 < 𝛾 < 1. Conservative candidates will choose 𝛾s close to zero while liberal candidates will choose 𝛾s levels close to 1

• The government budget constraint is thus given by 𝛾 ∙ 𝑡𝑡𝑢 = 𝑢 − 1 − 𝛾 𝑡𝑡𝑢 ∙ 𝜈, where

𝜈 is mean income

• Voters

ers utility ility is given ven by: 𝑊

𝑗𝑘 𝑢 − 1 − 𝛾 𝑡𝑡𝑢 = 𝜄 𝑑

1 − 𝑢 𝑥 + 𝑢𝜈; 𝛾 ∙ 𝑡𝑡𝑢 − 1 2 𝑢 − 1 − 𝛾 𝑡𝑡𝑢 𝜈 − 𝜀

𝑘𝜈 2

where 𝑑(∙) is priva vate te consumption sumption and 𝜄 is a param amete eter r indi dicati cating ng the exten tent t to whic ich h voters ers valu lue e consumpti sumption

• n over

er tax policy licy. . The second term indicates a quadratic dratic prefe fere renc nce e for the tax x polic licy y accord cordin ing g the politic litical al orien entat tation

• n

Model del: : NR NRR and nd el elec ector toral al be beha haviour viour

• We obtain the preferred tax policy by differentiating voters utility as follows:

𝑢 − 1 − 𝛾 ∙ 𝑡𝑡𝑢 ∗ = 𝜀

𝑘 − 𝜄𝛾 ∙ 𝑡𝑡𝑢′ + 𝜄 𝜈−𝑥𝑗 𝜈2

The prefer ferred red tax polic licy will ll be decrea reasing sing to the margi ginal nal rate e of the per capi pita ta transfe sfer r that t is funde ded d by NRR, ceteris paribus the external prices. There are two elements in the model that can explain how redi distri stribu bution tion of NRR can n modify ify voting ting behavi aviou

• ur.

r. 1) the prefe fere renc nce e of the incu cumben mbent t towards ards redistr istrib ibuti ution

• n (𝜸)

) can affect voting behaviour via reducing the tax burden on income and wealth 2) NRR, , whic ich h depen end d on natural ral endow

• wme

ments ts and exoge geno nous us pric ices, es, can n influ fluen ence ce incumbent’s decisions on redistribution via social spending and ultimately affect voting behavi aviou

• ur. Note that high exogenous prices will have a negative effect on tax policy

Empiri rical cal approa roach ch

Since our theoretical approach predicts that social spending is used to alter voting behaviour, our interest is to generate evidence that this behaviour is facilitated by the availability of NNR Since electo toral l retur turns s to the incumb mbent t can be dete termin rmined by social ial spendin ing and socia ial l spendin ing can increase rease the deman and for non-tax tax revenues s while le non-tax tax revenues s from m NRR can boost st social al spendin ing with effects ts on votin ting behav avio iour, we resort to FE and IV estimators in a three-stage equation system. 𝑞𝑓𝑠𝑑𝑓𝑜𝑢𝑗𝑢 = 𝛾1𝑡𝑡𝑢𝑗𝑢 + 𝛾2𝑌𝑗𝑢 + 𝑣𝑗 + 𝑤𝑗𝑢 𝑡𝑡𝑢𝑗𝑢 = 𝛽1𝑜𝑏𝑢𝑠𝑓𝑡𝑗𝑢 + 𝛽2𝑌𝑗𝑢 + 𝑣𝑗 + 𝑤𝑗𝑢 𝑜𝑏𝑢𝑠𝑓𝑡𝑗𝑢 = 𝜀1𝑞𝑠𝑗𝑑𝑓𝑢 + 𝜀2𝑜𝑓𝑢𝑦𝑗𝑢 + 𝜀3𝑌𝑗𝑢 + 𝑣𝑗 + 𝑤𝑗𝑢 where 𝒒𝒇𝒔𝒅𝒇𝒐𝒖𝒋𝒖, is the voting share obtained by the president in country i in period t, 𝒕𝒕𝒖𝒋𝒖 denotes the endogenous social spending in % of GDP, 𝒐𝒃𝒖𝒔𝒇𝒕𝒋𝒖 measures NRR in % of GDP and 𝒒𝒔𝒋𝒅𝒇𝒋 and 𝒐𝒇𝒖𝒚𝒋𝒖 are prices of natural resources and a dummy variable indicating whether the country is a net NR exporter to proxy natural endowments, which both serve as our Instruments. 𝑌𝑗𝑢 is a vector of socioeconomic and political factors, while 𝑣𝑗 and 𝑤𝑗𝑢 are country-level fixed effects and idiosyncratic error terms, respectively. We esti timate mate 𝜸′s, 𝜷′s and 𝜺′s s simultan ltaneously sly by three ree stage least t squares ares

Data ta

Vari riab able le and sourc rces es Descript ription ion (period eriod 1990 90-2010) 2010) Variab ables les from m ECLAC LAC Soci cial al spen endi ding ng as % of GDP Total social government spending on health and education services, housing, social security and social assistance Natu tura ral resou

• urc

rces es production tion as % of GDP Total value of the extraction of natural resources (oil, minerals and metals) as percentage of the GDP. GDP P per capit pita Real GDP per capita in US $. Popu pulati lation

• n

Population to proxy market size Tax reven enues es by cent ntral al governm ernmen ent t as % of the GDP Total tax revenues by central governments as percentage of the GDP. Net et natural ural resou source ces s expor

• rter

ter Dummy variable indicating whether the country is a net natural resources exporter in the corresponding year to account for the level of natural endowments.

Data ta

Variab iables les from IMF Oil, l, minera erals ls and meta tal prices ces This variable results from a principal component analysis that summarises the variation of natural resources prices on international

• markets. It includes prices of crude oil, coal, natural gas, aluminium,

copper, iron, lead, nickel, steel, tin, zinc, gold, platinum and silver Variab iables les from World rld Bank’s Database ase of f Politica litical Institu stitutions tions Votin ting share re in last t presiden sidentia tial electi ction Percentage of votes obtained by the president in the last election. It Includes re-elected presidents. If elections were not held in the year in question, this variable takes the value corresponding to the last election. Years rs in offi fice ce Number of years of the chief executive of the country that has been in

• ffice.

Party rty orien ienta tation tion of f the incumb mben ent Categorical variable indicating: 1 right; 2 center; 3 left. Right are conservative parties; left are socialists, communists or social democratic; center are parties with centrist orientation. Legislative islative electio ctions s in the year r in questio stion Dummy variable indicating whether there were legislative elections in the year in question. Execu cutive tive electio ction in the year r in questio stion Dummy variable indicating whether there were executive elections in the year in question.

Sum ummar mary y sta tatistics tistics

• Soci

cial al spend nding g as % of the GDP average eraged d 11.4% .4% among ng 18 Latin in Americ erican coun untri ries es

• ver

er the period iod 1990-2009 2009

– Some countries spent t as much as 20% of f GDP on soci cial al secto ctors rs (Argentina, Brazil, Uruguay and Costa Rica) Other er countr tries ies allo locat ated just about t 3% % of f GDP to social ial sector ctors s (Central American countries)

• Produ

ducti ction

• n of natural

ral resou

• urce

rces average eraged d 4% as share re of GDP

– Some countries (e.g. Venezuela) observed production in the order of 30% in the mid-2000s.

• 46%

6% of countrie ntries s were e net export

• rters

ers

– Some countries have never er been net exporters (Central America, Uruguay) – Some countries have always ys been net exporters (Argentina, Chile, Colombia, Ecuador, Mexico, Peru and Venezuela) – Other countries switch tched ed from being net exporters to net importers and vice versa (Brazil and Dominican Republic)

• In terms

rms of political litical orientatio ientation, Latin in American rican gov

• vern

ernments ments are classi assified fied as as:

– 48% left-wing (socialists, communists and social democrats) – 12% right-wing (conservative parties) – 40% centre (moderate parties)

1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1990 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1991 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1992 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1993 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1996 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010

44 46 48 50 8 10 12 14 16 Social spending as % of GDP

Basic sic co correlates relates

The negativ tive e relatio ionsh nship p may reflect ct the fact t that t presid idents ents with low popu pula larity ty would ld tend d to alloca cate te more resourc urces es to social al spend ndin ing In this s case the incum umben bent t might ht be respondin ding in a way to alter votin ing prefer erenc ences es Negati tive ve correlatio ation n betwe ween en votes es obta tain ined ed by the presid ident ent in last electio tion n and socia ial l spendi nding ng as % % o

• f the GDP

Basic sic co correlates relates

We observe a cluster

• f low social

ial spend nding ing and natural ural resou source ce produ duction tion in the 1990s 90s and then a positi itive e tren end d domi minate ted by higher er commodit

• dity price

ces s in the e 2000s 0s

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

8 10 12 14 16 2 3 4 5 6 Natural resources production as % of GDP

Averag ages s of socia ial l spend nding ng and produ ductio ction n of natur ural l resourc urces es as % of the GDP

Basic sic co correlates relates

We find that low commo modi dity ty prices s are related ed to low produ ductio ction n averages es in the 1990s whereas high h commo modi dity ty prices s in the 2000s s seem to have boosted countries’ produ ductio ction If there is a relationship between social spending and natural resource rents, we s suspect pect commo modi dity ty prices s to be the media iating ting factor in that t relatio ionsh nship ip Produ ductio tion of natur ural l resour urces es and the prices es princip cipal l component ponent

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

2 3 4 5 6 20 40 60 80 100 Oil, minerals and metal prices

Re Resu sults lts

Votin ting share re obtain ained ed by president sident (1) (1) (2) (2) (3) (3) (4) (4) (5) (5) (6) (6) (7) (7) Social cial spendin ing as % of f GDP

• 1.369**
• 1.827
• 0.425
• 0.770
• 1.002
• 1.495***
• 1.653**

(0.580) (1.913) (0.413) (0.590) (0.765) (0.561) (0.715) NR productio ction as % of GDP 3.330**

• 0.902*

0.919*** 1.001*** 0.769** 0.940*** 0.842** (1.685) (0.462) (0.126) (0.343) (0.306) (0.341) (0.332) Instru strument ments NR prices ces 0.028** 0.042*** 0.074*** 0.081*** 0.073*** 0.078*** (0.014) (0.004) (0.011) (0.012) (0.011) (0.012) Net t NR exporter rter

• 1.497**
• 0.118
• 0.091
• 0.541
• 0.113
• 0.518

(0.608) (0.420) (0.499) (0.563) (0.533) (0.594) Obser ervations vations 356 356 356 356 356 356 356 R-sq squared ared 0.502 0.429 0.384 0.402 0.420 0.497 0.498 Numb mber er of countries tries 18 18 18 18 18 18 18 Fixed ed effe fects cts Yes Yes Yes Yes Yes Yes Yes Contro trols ls Socio cioecono economic mic contr trols ls Yes Yes No No Yes No Yes Political litical contro trols ls Yes Yes No No No Yes Yes Time me trends Yes Yes No Yes Yes Yes Yes Sarg rgan-Han ansen sen p-valu lue 0.000 0.000 0.074 0.184 0.786 0.181 0.274

Concl nclusions usions

• Our results seem to confirm the hypothesis that the

e availab labili ility ty of natu tural ral resou

• urc

rces es has facil ilitat itated d the redist istribu bution tion of governm ernmen ent t reven enue ues s through

• ugh social

cial spen endin ding g that t woul uld d have e othe herwise wise not t been en possib sible le in Latin in Ameri erica ca

• Our results show a negative

gative effect ect of social cial spen endin ding g on electo ectoral al gains ns for incu cumbe mbent nts

– This may reflect Casel elli li-Cu Cunnin ingham am hypothes thesis is, that under r competit etitive ive politica itical l system tems, s, a windfa fall ll of NRR provid vide e incumb mben ent t govern vernment ments s with incentiv tives es to increasin reasing soci cial al spendin ing with the aim of political itical gain ins s but it also so lowers wers their ir probab ability ility of surviva vival l due to an increased political competition

• Latin American countries were able to reduce poverty and inequality in the past 15 years

partly through the implementation of social policies. These dynamics would have not been possible without the abundance of NRR and favourable macroeconomic conditions

• However, the recent deterioration of international commodity prices has weakened the fiscal

space of LA countries, and brought to light the urgency of introducing broader and progressive tax reforms to ensure the sustainability of social spending. Ironically, ically, by affecti ecting ng incum umbe bent nts s beha haviour, iour, NNR R may have e been en delay laying ing such ch impor

• rtan

tant t struc uctu tural al refor

• rms

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