Why do oil-rich countries of the former Soviet Union differ in quality of governance?



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Free University of Berlin


A large body of literature finds a negative relationship between oil abundance and different governance indicators in developing countries. Still, there is a substantial variation among them in terms of quality of governance (QoG). Why do even similar oil-rich countries differ in QoG? This master thesis investigates that puzzle, taking three oil rich post-soviet states -Azerbaijan, Kazakhstan and Turkmenistan during 1996-2014- as examples. Relying on the literature on the rentier state theory, fiscal sociology paradigm and ownership structure theory, this study finds that the difference can be explained by the chosen ownership structure of natural resources. Not aimed at generalizing the findings, this study shows that the more substantial role private companies have in the oil industry the better is the QoG.