1. How do discoveries of natural resources, such as oil reserves, affect a country's political institutions?...

Transcribed Image Text:

1. How do discoveries of natural resources, such as oil reserves, affect a country's political institutions? This is an important question for students interested in international relations, public policies, and energy markets. Kevin Tsui uses a data set with 132 observations to answer this question using a few OLS regressions, reported below. The response variable in all regressions is the change in a country's political institutions, as measured by the Polity IV index - an index that ranges from -10 for an autocracy to 10 for a full democracy. The variable of interest among the explanatory variables is the amount of oil discovered in a country in the last decade, measured in 100 Giga barrels. Regression 1 is a single variable regression, looking only at the effect of oil discoveries on the change in Polity IV index. Regressions 2 and 3 are multi-variable regression, including additional information about a given country. Standard errors of the coefficients are shown in parentheses below each coefficient. Ignore the stars on the coefficients. Variable Oil Discovered (per 100 Gb) OilxDemocracy Before Discovery Democracy Before Discovery In (Income Before Discovery) In (Population Before Discovery) OLS OLS OLS (1) (2) (3) -0.075 (0.030)* ** -0.106 (0.038)** -0.152 (0.045)** 0.283 (0.089)** -0.823 (0.094)** -0.781 (0.092)** 0.117 (0.033)** 0.008 (0.014) 0.114 (0.035)** 0.002 (0.017) Fraction Muslims -0.268 -0.217 (0.069)** (0.078)** Ethnic Fractionalisation British Legal Origin Communist Independent Before Discovery -0.147 -0.168 (0.087)* (0.093)* 0.020 (0.052) 0.036 (0.052) I -0.216 (0.057)** 0.128 -0.180 (0.063)** 0.091 (0.055)** (0.059) 1. How do discoveries of natural resources, such as oil reserves, affect a country's political institutions? This is an important question for students interested in international relations, public policies, and energy markets. Kevin Tsui uses a data set with 132 observations to answer this question using a few OLS regressions, reported below. The response variable in all regressions is the change in a country's political institutions, as measured by the Polity IV index - an index that ranges from -10 for an autocracy to 10 for a full democracy. The variable of interest among the explanatory variables is the amount of oil discovered in a country in the last decade, measured in 100 Giga barrels. Regression 1 is a single variable regression, looking only at the effect of oil discoveries on the change in Polity IV index. Regressions 2 and 3 are multi-variable regression, including additional information about a given country. Standard errors of the coefficients are shown in parentheses below each coefficient. Ignore the stars on the coefficients. Variable Oil Discovered (per 100 Gb) OilxDemocracy Before Discovery Democracy Before Discovery In (Income Before Discovery) In (Population Before Discovery) OLS OLS OLS (1) (2) (3) -0.075 (0.030)* ** -0.106 (0.038)** -0.152 (0.045)** 0.283 (0.089)** -0.823 (0.094)** -0.781 (0.092)** 0.117 (0.033)** 0.008 (0.014) 0.114 (0.035)** 0.002 (0.017) Fraction Muslims -0.268 -0.217 (0.069)** (0.078)** Ethnic Fractionalisation British Legal Origin Communist Independent Before Discovery -0.147 -0.168 (0.087)* (0.093)* 0.020 (0.052) 0.036 (0.052) I -0.216 (0.057)** 0.128 -0.180 (0.063)** 0.091 (0.055)** (0.059)