Does diversification improve institutions in resource rich countries?

Abstract

Angola is the world’s second most concentrated country in terms of exports. Furthermore, concentration has increased during recent years. Angola also faces the challenge of a resource curse prevalent in resource rich countries with weak institutions. This brief argues that diversification has to address the scope for patronage and rent seeking if it is to efficiently counteract the resource curse. We focus on how diversification affects the scope for patronage through its effect on institutions of democratic accountability. We find that it is the pattern of industrial activity rather than diversification per se which affects institutions like democracy.