Algeria's agonies

Oil Rent Effects in a Bunker State

Bibliographic Data

ID3979199
AuthorsClement M Henry (corresponding author)
Year2004
Volume9
Issue2
Pages68-81
Publication date2004-01-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueThe Journal of North African Studies (JOURNAL)
Journal identifiersISSN: 1362-9387 • E-ISSN: 1743-9345
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/1362938042000323347
OpenAlexW1989137720
LanguageEN
Citations received7
References cited4

Algeria’s agonies of economic adjustment and chronic civil war are excessive by Mediterranean standards. Algeria would appear to illustrate many of the pernicious effects ascribed to oil rents: a distorted economy, civil strife, and authoritarian government. In much of the literature about oil and other natural resource “curses” political economies suffer from a sort of geological predetermination: mineral wealth is a form of original sin. This paper, while tracing the connections between Algeria’s oil wealth and its slide into the disasters of 1990s, will argue that the original sin was a primitive form of French colonialism, not hydrocarbons. Before the oil revenues took off in the 1970s Algeria’s trajectory was already conditioned by the intensity of the colonial occupation, the trauma of national liberation, the destruction of civil society and political intermediaries, and a lingering identity crisis. The state remained alien, bereft of legitimacy, at best a source of rents for political profiteers. Oil wealth may have compounded Algeria’s difficulties, but the decimation of the country’s intermediaries better explains how the problems arose and why they are so acute today in Algeria compared to neighboring countries. Oil rentier states, if not definitively damned by their wealth, supposedly share certain failings arising from the atrophy of their extractive capacity (Biblawi 1990, Chaudhry 1997, Karl 1997). Blessed with substantial oil revenues, they need not tax their populations as much as other states enjoying similar levels of per capita income. Consequently, the argument goes, they need not be as accountable to their citizenry as the other more extractive states. They enjoy a relative autonomy of sorts, or insulation, so long as the rents keep flowing, from social and political pressures, just as the petroleum industry itself is highly capital intensive and employs few workers and enjoys few other linkages with the broader economy (Mahdavi 1970). Dependence on oil revenues, however, is likely to lead to overspending, debt and fiscal crises because of the volatility of international petroleum markets. Moreover the economy gets distorted with the socalled Dutch disease: times of boom diminish the value of tradable goods relative to real estate and services, leading to a greater dependence on the petroleum revenues and less ability to export other tradable goods (like Dutch tulips, but cf. Ross 1999: 306 who warns us that the theory may not fit poorer labor abundant countries, such as Algeria. See Alan Gelb’s calculations, 1988: 88, 162, 167, showing that Algeria did not really fit the model). When the oil prices tumble, rentier states are in trouble. Civil strife as well as economic hardship may result, and the state, traditionally isolated from social forces

Authoritarianism · Colonialism · Democracy · Development economics · Economic rent · Economics · Economy · Legitimacy · Market economy · Political economy · Political science · Politics · State (computer science · Global Energy and Sustainability Research · Law · Market Dynamics and Volatility · Natural Resources and Economic Development

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