POLITICAL ECONOMY OF OIL AND FORMATION OF AN OIL STATE IN - PowerPoint PPT Presentation

POLITICAL ECONOMY OF OIL AND FORMATION OF AN OIL STATE IN AZERBAIJAN PhD PROJECT Hafiz Aliyev

“OIL STATE” ♦ Economically – RENTIER ♦ Politically – AUTHORITARIAN OR SEMI-AUTHORITARIAN

“OIL STATE” ♦ RENTIER: Economic gains from export of a natural resource (in our case, oil) constitute the most substantial part of the revenues of the state. ♦ AUTHORITARIAN: Lack of participatory democracy and political pluralism, & exercise of coercive power of the state on other political and social forces.

THE LINK BETWEEN AUTHORITARIAN POLITICAL STRUCTURE AND RENTIER ECONOMY Why are we concerned about it? => =>Empirical evidences: - Kuwait, S.Arabia, UAE, Bahrain, etc.; - Nigeria, Iraq, Algeria, etc.

Why does it happen in the case of OIL, not other resources? Characteristics of oil as a commodity: • Non-price elastic product; • Different from other sources of wealth (for example, diamonds, gold, narcotics, etc…). • Strategic product, i.e: - Not only economic gain; - But also political influence.

So, IS AZERBAIJAN A FORTHCOMING OIL STATE? - Primary Analysis: economic and political trends since independence (1991). - Secondary Analysis: Importance of oil in pre-Soviet independence (2 years) and Soviet periods – in order to find whether there are historical roots of this phenomenon in Aze.

ELEMENTS/FACTORS TO WATCH IN THE FIELD OF ECONOMY: ♦ Economic significance of oil revenues (percentage of GDP); ♦ Legal and practical control over oil revenues => Oil Fund? ♦ Liberal economic structure; ♦ Existence/lack of independent business elite.

ELEMENTS/FACTORS TO WATCH IN THE FIELD OF POLITICS: ♦ Political structure (clan, kinship, & regional affiliation, separation of powers, etc); ♦ Democracy & political pluralism; ♦ Existence/lack of strong pol. opposition; ♦ Degree of social consent and political coercion; ♦ Civil control over pol. & econ. issues.

Link between rentier economy and political authoritarianism ♦ Link between power relationships and production/economic relationships ♦ Link between political and economic factors: - political effects of economic variables; - economic effects of political variables.

PRELIMINARY FINDINGS ♦ Some evidences in the field of politics and economy; ♦ Expected rise in oil revenues from the export of major oil: -- Norway or Nigeria? -- Kuwait/S.Arabia or Iraq/Algeria?

POLICY RECOMMENDATIONS ♦ What to do? • Political sphere • Economic sphere • External factors

Thank you for your attention!