Deep Determinants of Corruption? A Subnational Analysis of Resource Curse Dynamics in American States

Abstract

Drawing on comparative resource curse literature and American literature on the determinants of corruption, we argue that the impact of natural resource extraction on corruption outcomes is state-dependent. That is, in environments where corruption is already high, natural resource windfalls allow political actors and economic elites to take advantage of state brokerage, further increasing corruption. However, in previously less-corrupt states, increased natural resource extraction will not induce corruption. We rely on hierarchical linear models to interpret federal corruption convictions data for the fifty American states between 1976 and 2012 and employ generalized method of moments estimators to account for potential endogeneity. The findings are robust to alternative specifications and have implications for the management of new resource extraction opportunities.

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