Blessing and Curse: Oil and Subnational Politics in the Argentine Provinces

Tipo de publicación: Artículo en revista académica
Fecha: 2016
Autor(es): Diego Diaz Rioseco

Recent studies on the subnational resource curse contend that subnational rentier units suffer from the same nondemocratic tendency as their national counterparts. However, subnational rentier states worldwide exhibit contrasting political outcomes. Why are some subnational rentier units politically competitive whereas others are not? This article argues that rent-sharing regimes—the fiscal institutions for sharing resource revenues among levels of government—condition political competitiveness at the provincial level. Using novel time-series cross-sectional data on Argentina, a case with several hydrocarbon-rich units with exogenously created rent-sharing regimes, I show that oil creates negative political effects at the provincial level only when these institutions do not share—or share minor amounts of—rents with municipal governments. Conversely, political competition emerges when rent-sharing regimes distribute rents to municipal governments, as this shrinks large provincial budgets, allows municipalities to deliver public and private goods, and gives municipal politicians fiscal independence from provincial governments.