THE RESOURCE EFFECT: CORRELATIONS BETWEEN EXPORTABLE RESOURCE RELIANCE, ECONOMIC POLICY, AND VARIOUS FREEDOMS IN THE FORMER SOVIET UNION

Open Access
Author:
Marek, Stephanie Leona
Area of Honors:
Economics
Degree:
Bachelor of Arts
Document Type:
Thesis
Thesis Supervisors:
  • David Shapiro, Thesis Supervisor
  • Bee Yan Roberts, Honors Advisor
Keywords:
  • Transition Economics
  • Resource Effect
  • Post-Soviet
Abstract:
The purpose of this thesis is to examine the relationship between a state’s possession of natural resources and its economic development. Known as the “resource effect,” areas that are able to profit from exporting natural resources have less of an incentive to implement economic reform and subsequently democratize. This is due to several effects presented by M. Steven Fish (2005), which include a state’s ability to provide government programs due to revenue, corruption, and the maintenance of opaque state ownership over fuel industries. As a result of these effects, the state does not need to encourage entrepreneurship through property rights, a sound banking system, and other institutional factors that allow for business and technological expansion. Instead, governments choose to withhold political rights and civil liberties in order to maintain their political position and safeguard control over resource revenue. This paper focuses these theories on the former Soviet Union, specifically on six of the fifteen states that remained within the union at its collapse in 1991. Choosing Russia, Estonia, Armenia, Ukraine, Azerbaijan, and Kazakhstan, these states encompass the USSR’s geographic diversity and represent states with and without natural resources. By offering an economic, political, and developmental overview of each state, the thesis shows that the Baltic states and others without resources tend to have higher freedom levels and a more solid financial system than those that have made a steady profit from natural resource exports. The thesis also draws upon Russia’s role in stunting economic transitions based on its control over pipelines and massive fuel reserves.