Steffen Hertog

Defying the resource curse: explaining successful state-owned enterprises in rentier states

The article explains how several Gulf rentier monarchies have managed to create highly profitable and well-managed state-owned enterprises (soe s), confounding expectations of both general soe inefficiency and the particularly poor quality of rentier public sectors. It argues that a combination of two factors explains the outcome: the absence of a populist-mobilizational history and substantive regime autonomy in economic policy-making. The author concludes that it is necessary to rethink the commonly accepted generalizations both about rentier states and, arguably, about public sectors in the developing world.

Why are there so many Engineers among Islamic Radicals

This article demonstrates that among violent Islamists engineers with a degree, individuals with an engineering education are three to four times more frequent than we would expect given the share of engineers among university students in Islamic countries. We then test a number of hypotheses to account for this phenomenon. We argue that a combination of two factors – engineers’ relative deprivation in the Islamic world and mindset – is the most plausible explanation.

The sociology of the Gulf rentier systems: societies of intermediaries

Theories about the politics and economics of resource-rich or “rentier” states have been around for almost four decades now (Mahdavy 1970; Beblawi 1987; Chaudhry 1997; Humphreys et al. 2007). Political scientists and economists have argued that rents have a negative impact on levels of democracy (Luciani 1987; Ross 2001), on the quality of institutions (Chaudhry 1997; Isham et al. 2005), and on economic growth (Sachs and Warner 2001). Although much debate has been conducted over these macro-correlations, far less attention has been devoted to the causal mechanisms behind them. There is still no unified theory of rentier states, and the micro-foundations of rentier systems in particular have gone largely unexplored.

SHAPING THE SAUDI STATE: HUMAN AGENCY'S SHIFTING ROLE IN RENTIER-STATE FORMATION

There are two established ways of recounting the emergence of the modern Gulf oil monarchies. The social scientific explanation describes anonymous structural forces, the “resource curse” of the “rentier state,” and how these have shaped politics and markets with their inexorable logic. The other narrative, of the popular history variety, offers romantic, personalized accounts of desert shaykhs, their whims, and the sudden riches of their families (complemented, in some less benevolent accounts, by tales of monumental corruption).

Rentier Militaries in the Gulf States: The Price of Coup-Proofing

Oil and dynastic rule have led to an idiosyncratic pattern of state formation in the Gulf, and in few parts of the state are the idiosyncrasies more pronounced than in the security sector. Oil income has allowed the ruling families of the Gulf Cooperation Council (GCC) to engineer a relatively soft, rent- and patronage-based authoritarianism characterized by multiple centers of power and huge institutional redundancies. Having constructed their police and military forces along these lines, their monarchical rule has become more resilient, but their armed forces also more hapless.

Two-level negotiations in a fragmented system: Saudi Arabia's WTO accession

ABSTRACT Based on a case study of Saudi Arabias WTO accession, the article offers a critique of conventional factor- and sector-based models of trade policy, proposing instead a two-level institutional account that is likely to be relevant for non-democratic states in general. Historically grown patterns of institutional fragmentation in both public and private sector in Saudi Arabia have made interest formation and the building of policy coalitions difficult. Various WTO-related economic reforms have therefore been held up as long as they were negotiated within the disjointed Saudi system. However, as soon as the Saudi leadership decided to directly follow the reform demands of its international negotiation partners, changes were rammed through rapidly – as institutional fragmentation of interests prevented an encompassing veto coalition against a comprehensive policy package which was in its substance imposed from outside. Fragmentation of state, business and relations between them can hence mean policy stalemate, but can also make for rapid policy adjustment under conditions of external pressure. In its conclusion, the article relates these findings to the institutionalist literature on trade in general.

Petromin: The slow death of statist oil development in Saudi Arabia

The paper recounts the history of Saudi Arabias first national oil company, Petromin, which was originally supposed to take the place of foreign-owned Aramco. As a result of Petromins inefficiency and personal rivalries among the Saudi elite, however, Petromin was progressively relegated to the sidelines in favour of a gradually ‘Saudiised’ Aramco. As a result, the organisation of the Saudi oil sector today is very different from – and more efficient than – that of most other oil exporters in the developing world. The paper concludes with a tentative taxonomy of national oil companies, based on the circumstances of nationalisation.

Making wealth sharing more efficient in high-rent countries: the citizens’ income

This paper argues that hydrocarbon producers with high rents per capita constitute a specific category in the broader universe of rent-dependent countries, facing a specific set of development challenges that are not shared by mid-rent countries. It surveys patterns of rent distribution in high-rent countries (HRCs), focusing on energy subsidies and excessive public employment, and argues that these result in declining energy efficiency and labor productivity as well as exclusion of nationals from the private labor market. It then proposes unconditional cash grants for HRC citizens in combination with subsidy and public employment reform as a mitigation strategy to minimize the HRC-specific distortive effects of rent distribution. It is shown that none of the conventional counterarguments to unconditional cash grants applies in the context of HRCs.

The Political Economy of Saudi Arabia

does a good job at suggesting some of the complexities involved; there is less reflection about how these complexities bear on treating growth as the most important determinant of development. Chapter 9’s discussion of debt acknowledges that relief would likely increase social service spending but argues that this would ‘probably not’ provide a ‘major’ gain in economic growth (p. 160). The questions of whether increased welfare spending would increase development outcomes, or of the creditors’ own interests in the debt process, go unanswered. Part Three’s discussion of regionalism and globalisation repeats three positions about the effects of imposed borders that are, ultimately, contradictory. One argues that the resultant states lack ethnic or historical resonance with the population or ‘realities on the ground’; another that the resultant states are the wrong size (either ‘huge, unwieldy, and probably ungovernable’ or ‘tiny unviable states’; and the third that too many (15) are landlocked (pp. 189 ff.). In fact, a population size of under five million correlates with higher development worldwide. Of the 177 countries in the 2007–2008 UNHDI rankings, 25 per cent of the High Human Development group are this size, compared with about 20 per cent of those of the Medium and Low groups. Similarly, of all landlocked countries in the listings, more than a quarter are in the High group, half in the Middle group, and just under a quarter are in the Low group. Finally, as Englebert (2000) has argued persuasively, it is precisely the states with the greatest overlap with precolonial entities that currently enjoy the greatest postcolonial political coherence – including Botswana, Lesotho, Swaziland and Ethiopia – but these are also mostly small and all landlocked. Amidst glosses on various aspects of trade, there are some jarring gaps. The discussion of comparative advantage (p. 205) neglects to mention the assumption of full employment. There is no mention of the effects on Africa of the abrupt US shift from world’s largest creditor to world’s largest debtor. Bizarrely, China merits one passing mention (p. 120) among other donor nations, with no discussion of China’s decisive role during the past decade anywhere in Part Three. While there may still be ‘much that we simply do not know’ (p. 243), much that we do goes missing here.