The oil crash of 2014-2015 may trigger a wave of democratization in crude-exporting countries across the world, according to research from Renaissance Capital:
The emerging market-focused investment bank based its analysis on the oil price collapse of 1985. It said this event helped trigger democratization in oil-exporting places including Mexico, Iran, Algeria and the former Soviet Union between 1988 and 1990.
“We wonder if the 2014-2015 oil price fall may provoke similar democratization in Russia, Iran and Venezuela in 2018-2020,” Charles Robertson, chief economist at Renaissance Capital, said in a report on Tuesday. …..This democratization was seen applying only to countries whose oil exports were small in net per capita terms. Compared with Qatar and Kuwait, each of which exported over 600 barrels of oil per day per 1,000 people in 2015, Venezuela exported 63 barrels and Russia and Iran even less.
“(Large net) energy exporters (per capita) don’t become democracies. Countries that are net oil exporters do not tend to tax their people, so they don’t give them a vote,” Robertson said.
“As countries get richer, they all end up becoming democracies, unless they are oil exporters or are a city-state called Singapore,” Robertson said. He saw Malaysia as another middle-income country that might re-democratize, in part due to the ongoing corruption scandal that allegedly involves Prime Minister Najib Razak.
“If the governing coalition is defeated at the August 2018 election (after effectively being in power since 1955), then Malaysia may well return to a ‘democracy’ category ranking. The trigger may be the current corruption scandal,” he said.