Abundant Resources, Yet Little Freedom
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Policy Strategy Economics Jun 1, 2011

Abundant Resources, Yet Little Freedom

Why dictators of resource-rich countries muzzle the press

Based on the research of

Georgy Egorov

Sergei Guriev

Konstantin Sonin

For any aspiring dictator, it would seem the ideal amount of freedom to give the press is none at all. An unfettered media can ferret out corruption, expose the wrongdoings of world leaders, point out failings of governmental policy, and serve as a platform for organizing uprisings and coups.

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But, says Georgy Egorov, an assistant professor of managerial economics and decision sciences at the Kellogg School of Management, there is a great degree of variation in freedom of the press among non-democratic nations. Some dictators silence their media with an iron fist while others grant their press a sizable amount of autonomy.

According to a study Egorov published in the American Political Science Review, these variations are a result of the somewhat surprising fact that an uncensored media actually has a lot to offer a non-democratic regime. Egorov and the study’s two co-authors, Sergei Guriev and Konstantin Sonin, both professors at Moscow’s New Economic School, were “particularly interested in non-democratic regimes,” says Egorov, because of their shared upbringing in the former Soviet Union. They were also very curious about a decision former Soviet leader Mikhail Gorbachev made in 1985.

Gorbachev’s Dilemma

In a moment in history that would come to be known as “Gorbachev’s dilemma,” Gorbachev, then new to the job, was grappling with a big budget deficit and plummeting oil prices. While Gorbachev came to power with an agenda that hardly called for governmental openness, it was clear the USSR’s “command economy” was in need of serious reform. But the government bureaucracy had grown so large and unwieldy, Gorbachev could not get reliable information or evaluations on the progress of government programs, and, in the absence of any competing political party, there was very little impetus for change. Gorbachev’s solution was to adopt a new policy of “glasnost,” the Russian word for openness. A freer media could better report on Gorbachev’s own government, supplying him with more accurate information on how his orders were being carried out and, more important, holding his bureaucratic subordinates accountable—a major incentive for getting things done.

The dilemma, Egorov notes, is that a freer media would also enable the flow of information to Russian citizens, who would then be better able to learn about the successes and failures of their leaders. Gorbachev’s gamble was that his beleaguered citizenry would be placated partly by the new media freedom and also by the resulting reports on the progress of overhauling the Soviet government. The risk, of course, would be that this new free media would cast his regime in a negative light, creating a perception of incompetence and emboldening the public to push for a changing of the guard.

Egorov says another Soviet case study further shaped their hypothesis. Before Gorbachev’s time, Leonid Brezhnev adopted the opposite policy on freedom of the press. Brezhnev “was like two different people,” Egorov says. At first, he was more open to reform, having appointed pro-reform Alexey Kosygin as his prime minister, but by the end of his tenure, Brezhnev had consolidated and tightened his power and dropped the talk of change. According to Egorov, “as Siberian oil deposits were discovered and exported, there was an inflow in petro dollars and he could import consumer goods to appease the population, eliminating the need for reform.”

Coincidence?

In both of these cases, the fortunes of the oil market seemed to coincide with governmental policy change. Intrigued, Egorov and his colleagues suspected that the influence of oil and the dynamic of a free press in a non-democratic country would extend beyond these Soviet snapshots. They developed a pared-down game-theoretic economic model to explore the relationship between oil reserves, dictators, bureaucrats, and media freedom. What conditions, they wondered, would lead a dictator to open the spigot on the flow of information?

In their initial model, there is a dictator, a bureaucrat, and a country full of like-minded citizens. The citizens will overthrow the dictator if he is found to be incompetent, which may happen if either an evident policy disaster occurs or, more likely, the media reports evidence that the dictator is incompetent. This makes a free media dangerous to the dictator. At the same time, to minimize the chance of policy failure, the dictator needs to provide the right level of incentives to the bureaucrat and must get feedback somehow about the bureaucrat’s performance. Ironically, a free media then becomes a blessing, because it gives the dictator feedback that is easy to get but difficult for the bureaucrat to manipulate. The dictator therefore faces a trade-off: a free media allows him to achieve higher performance in his regime but face possible public unrest, while a censored media almost guarantees that he will never hear about failures among his subordinates.

Abundant oil reserves were negatively related to freedom of the press. In other words, the more oil in any given nation, the quieter the media became.

The variable of resource abundance kicks in when a dictator must decide whether the performance of his government is more important than staying in power. If he is resource-poor, a dictator is less able to provide the public goods and bureaucratic incentives that will keep everyone relatively content. He is also sitting on less money, so the job itself is less attractive. Overseeing a productive regime then becomes more important, and a free media both keeps tabs on his bureaucrats and reports policy success to the masses. Higher oil reserves, however, increase both a dictator’s desire to stay in power and ability to import goods and services, and the latter decreases any need for good bureaucratic incentives. Put simply, Egorov says, “more oil unambiguously means that the dictator will choose less media freedom.”

Using the press indices from Freedom House and Reporters without Borders as well as other sources of information on variables like the global price of oil, each country’s known oil reserves, and the World Bank’s Governance and Anti-Corruption project, the researchers examined data from 1993 to 2008. The story of the world’s media outlets and global oil reserves over the last fourteen years confirmed that they were on to something.

Abundant oil reserves were negatively related to freedom of the press. In other words, the more oil in any given nation, the quieter the media became. The effect was especially pronounced in non-democratic nations. Frequently, dictators sitting on large oil reserves showed a reluctance to open up their national media, preferring instead to use the money generated from the oil to placate the masses by importing goods and keeping their bureaucratic subordinates happy with other incentives. Conversely, dictators lacking resources or facing falling prices for their main exports decided to open up and reform, even at the threat of their position, as Gorbachev did.

A Model Pattern

Egorov says he never expected to see such robust patterns emerge from the relatively short sample period. “We weren’t sure that we’d be able to see [our economic model supported] in the data,” he recalls. “We were quite surprised that this was, in fact, the case.”

Egorov says it helped that they were exploring variables like oil reserves/oil prices and media freedom, since both variables can change quickly over time. This let the researchers capture ever more detailed information. Other such economic studies have focused on things like political competition, party systems, and public rights, which all emerge on much slower time frames. In the course of a single year, however, a regime could both discover new oil deposits and crack down on its media. Conversely, the depletion of an oil deposit can quickly turn a country from a producer into a consumer, and, if a government relaxes regulations on its press, news starts flowing quickly.

Another benefit of examining oil reserves, Egorov notes, is that oil is globally traded at fairly similar and (until recently) fairly affordable prices, which means that a lack of oil fields in any given country does not prohibit that country from industrializing. It can simply buy oil from someone else. Conversely, a country rich in oil reserves can actually bring in income from oil and is not restricted to using it only for industry.

Time and again, Egorov says, when they compared their model’s predictions with real-world examples, a pattern emerged: while other rich countries may have had high GDPs and massive amounts spent by their governments, only oil wealth corresponded with media freedom. In non-democratic countries swimming in oil, the press can expect very little freedom.

The authors note that one big exception to their theory is China. While a nation with very little in the way of oil reserves or other resources, China is extremely heavy-handed with its media. And, as Egorov says, Chinese rulers are now facing their own “Gorbachev’s dilemma.” This censorship of the media has recently allowed health issues like SARS to get quickly out of hand as no one, not even Chinese officials, could get accurate information on the outbreak. On the other hand, dissent in China is growing, and even minor lapses in media censorship show that there is a robust resistance that would use a free press to challenge the current regime. However, Egorov notes, China has adopted a unique system to get around its conundrum. Its leaders have allowed citizens to vote for officials at the village—but not national—level. China also passed a law in 2007 allowing for greater citizen access to government information.

Of course, says Egorov, this is an imperfect solution. President Hu Jintao still struggles daily with the dilemmas that besiege every dictator. Give too much to your citizens and they use their new freedoms to organize against you. Fail to give enough and unrest grows, resulting in the same problem. Either way, Egorov notes, “it’s not the kind of job that you’d necessarily want.”

Related reading on Kellogg Insight

A Populist Paradox: Populist policies may harm voters but reward leaders

Do Leaders Matter? The sudden death of a president can trigger sweeping, unexpected changes in a nation’s economy

Featured Faculty

James Farley/Booz, Allen & Hamilton Research Professor; Professor of Managerial Economics & Decision Sciences

About the Writer
Adam Hinterthuer is a freelance science writer based in Madison, Wisconsin.
About the Research

Egorov, Georgy, Sergei Guriev and Konstantin Sonin. 2009. “Why Resource-Poor Dictators Allow Freer Media: A Theory and Evidence from Panel Data.” American Political Science Review. 103(4): 645-668.

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