Rudra e Jensen 2011 Globalization and Politics of Natural Resources

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Comparative Political Studies
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DOI: 10.1177/0010414011401207
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 2011 44: 639 originally published online 18 AprilComparative Political Studies
Nita Rudra and Nathan M. Jensen
Globalization and the Politics of Natural Resources
 
 
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Comparative Political Studies
44(6) 639 –661
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DOI: 10.1177/0010414011401207
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Globalization and 
the Politics of 
Natural Resources
Nita Rudra1 and
Nathan M. Jensen2
Abstract
Much political science scholarship, including important work in this 
journal, has explored the implications of natural resource endowments—
particularly oil and other highly valuable export commodities—on political 
and economic outcomes. Although the first wave of literature emphasized 
the negative effects of these resources, more recent work emphasizes how 
domestic institutions can condition the relationship, sometimes leading to 
positive effects. In this special issue, the authors expand this literature in two 
important ways. First, they renew attention on the international dimensions 
of this relationship, exploring how trade, migration, foreign investment, and 
other global forces influence the effects these resources have on countries. 
Second, they link the study of the globalization–natural resources nexus to 
broader debates in international and comparative political economy, such 
as how domestic institutions shape the impact of globalization and how 
economic factors affect the political survival of regimes and individual leaders. 
The five studies in this collection use a variety of research methodologies 
(formal models, country case studies, and large-N empirical analyses) to 
examine several different international economic factors linking resources 
with politics. The findings provide new insights into the politics of natural 
resources, expand the traditional focus of the resource curse literature to 
1University of Pittsburgh, Pittsburgh, PA, USA
2Washington University in St. Louis, St. Louis, MO, USA
Corresponding Author:
Nita Rudra, University of Pittsburgh, Graduate School of Public 
and International Affairs, 3221 Posvar Hall, Pittsburgh PA 15260
Email: rudra@pitt.edu
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640 Comparative Political Studies 44(6)
include other natural resources (e.g., water), and shed light on whether 
globalization has the ability to improve natural resource governance around 
the world.
Keywords
natural resources, globalization, domestic institutions, resource curse, 
democracy, water
Globalization and Natural Resources: 
Puzzles and Opportunities
Scores of scholars, journalists, and antiglobalization activists claim that the 
acceleration of global economic activity is putting great pressure on natural 
resources.1 Much of their concern is based on the growing participation of 
emerging nations—such as China and India—in global markets and the strain 
that the subsequent rise in global demand for commodities puts on the earth’s 
resources. Indeed, experts predict that the supplies of many of the world’s 
nonrenewable natural resources could reach their peak in the next 20 to 30 years 
and decline thereafter.2
The relationship between globalization and natural resources is of imme-
diate interest to political science: The consequences for the distribution of 
power may be profound. Not only might leaders in resource-rich nations such 
as Libya, Venezuela, and Iran be emboldened by their control over these 
increasingly coveted resources, but also resource-dependent nations might 
find it more difficult to expand their global economic power and maintain 
domestic stability. Such power repercussions are part of why political scien-
tists have been analyzing how nations utilize their natural resources. Most 
studies, however, have focused on how domestic factors enable countries (or not) 
to effectively harness resource wealth. It is striking that in the more recent 
literature, the international dimensions of this problem have been largely 
neglected.
Scholars in this special issue undertake one of the first efforts to systemati-
cally investigate the relationship between (the current phase of) globalization 
and the governance of natural resources in developing economies. The “gov-
ernance of natural resources” can be understood as the interactions among a 
(formal and informal) body of rules, processes, and traditions that determine 
how power and responsibilities are exercised, how decisions are made, and 
how or to what extent citizens or other stakeholders may have a say in the 
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Rudra and Jensen 641
management of natural resources (see Graham, Amos, & Plumptre, 2003). 
This definition purposefully reflects a broad notion of governance, allowing 
us to more fully capture the many angles of the globalization–natural resources 
relationship. With this definition in mind, we can begin to investigate how 
international market expansion affects the ways in which states extract andmanage their natural resources as well as whether globalization influences the 
extent to which states use their natural resource wealth to respond (or not) to 
the needs of their citizens. We define globalization primarily in economic 
terms, referring specifically to the reduction of barriers between countries to 
facilitate the flow of goods, capital, services, and labor.3
Over the past few decades, most developing countries have become steadily 
more integrated into the global economy. International trade in both manu-
factures and commodities has become substantially more important to most 
of these nations (see Figures 1 and 2).4 At the same time, they have become 
more open to international capital flows in general and foreign direct investment 
in particular (see Figure 2).5 For this special issue, it is particularly relevant 
that these trends toward increased openness have been especially evident in 
many fuel-rich developing countries, particularly after the early 1980s when 
many developing countries began opening their markets (see International 
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Figure 1. Merchandise exports of developing countries (% of GDP)
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Uma definição de globalização.
642 Comparative Political Studies 44(6)
Monetary Fund [IMF], 2008, and Figure 3). Finally, an often-neglected 
aspect of globalization—the mobility of labor—has also been on the rise 
since the early 1970s (see Figure 4).6 Expanding global opportunities have, 
in poor countries, created a labor force more eager to migrate and take 
advantage of these new possibilities (Castles & Miller, 2003; Hatton & 
Williamson, 2005).
Does globalization affect the governance of natural resources, and if so, 
how? Our goal in this issue is to set the foundations for a broader research 
agenda that encourages researchers to consider the role of the global econ-
omy in analyses of the governance of natural resources. We begin with a 
basic assumption that international market pressures affect how states govern 
natural resources; hereby, we initiate the dialogue by exploring some of the 
implications of this assumption. We take the approach that globalization is 
unlikely to have a uniform effect on the governance of natural resources in all 
countries. Even if globalization is increasing the demand for natural resources, 
we expect national responses will vary according to, inter alia, the nature of 
a country’s domestic institutions.
We begin by drawing from the extant literatures in international political 
economy (IPE) and comparative political economy (CPE) that have shown how 
domestic political institutions can mitigate or condition the impacts of interna-
tional markets.7 The inference is that the effect of international market expan-
sion on resource governance will depend on how institutions filter the responses 
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% of GDP)
Portfoilio Equity and FDI
Net Inflows (% of GDP)
Figure 2. Trade and capital inflows for developing countries
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Rudra and Jensen 643
0
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Figure 3. Breakdown of merchandise exports for fuel-rich, non–Organisation for 
Economic Co-operation and Development (OECD) countries
0.00E+00
5.00E+07
1.00E+08
1.50E+08
2.00E+08
2.50E+08
Number of interna�onal
migrants
20102000199019801970
Figure 4. Number of international migrants
644 Comparative Political Studies 44(6)
of those whose preferences are changed as a result of globalization (see Frieden, 
1991; Keohane & Milner, 1996; Morrison, 2011). We anticipate that globaliza-
tion may or may not cause the governance of natural resources to improve, 
depending on the preexisting institutional context (e.g., the rule of law or the 
degree to which losers from openness can seek compensation).
Consistent with the extant literature on the resource curse, then, the major-
ity of the articles in this special issue focus on how globalization affects 
resource-rich nations. As a significant point of departure, however, the clos-
ing study in this collection encourages future research to expand the purview 
of this field to include analyses of how globalization affects the way political 
elites govern national resources that are not domestically abundant. Ques-
tions of how governments manage resources that are (globally) diminishing 
have received remarkably little attention in political science.8 The worldwide 
water situation serves as a good example. Even though it is currently viewed 
by the United Nations and other international organizations as a “water crisis,” 
scholars in political science have still to ask how the global economy—as 
well as domestic politics—might have contributed to this problem. The nega-
tive effects of globalization on scarce natural resources seem an obvious pos-
sibility; as developing countries become more reliant on international markets 
for the sale of their products, demand for increasingly scarce raw materials 
(e.g., water) as inputs in the production process begins to rapidly increase. 
The questions then become if and how domestic institutions mitigate such 
negative pressures of globalization.
In short, this issue offers an initial exploration of the impact of globaliza-
tion on natural resource governance. We explore theoretically and empiri-
cally the extent to which openness affects the manner in which governments 
manage natural resource endowments. We focus on how globalization affects 
natural resource governance in resource-rich countries; and at the same time, 
we encourage scholars to analyze more broadly some of the dilemmas and 
opportunities created by economic openness in managing resources that are 
increasingly scarce in supply, such as water and arable land. Since the latter 
are critical inputs to basic survival and production, it is obvious that improve-
ments in the governance of these natural resources may generate positive 
political and economic benefits for all nations.9
The International Dimensions 
of Natural Resource Governance
It is intriguing that so few social scientists in recent decades have engaged 
in rigorous analyses of how the dilemmas and opportunities created by the 
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endowment = dotação; alocação
Rudra and Jensen 645
current phase of globalization affect the governance of natural resources. 
Academics have not always neglected the role of international factors in 
assessing the prospects of resource governance. For example, in the 1950s 
and 1960s, the international economy was seen as the primary source ofproblems causing slow political and economic progress in countries depen-
dent on primary commodities. Dependency theorists argued that primary 
commodity exporters would suffer from a secular decline in the terms of 
trade, which would widen the gap between rich, industrialized nations and 
poor, resource-exporting countries. Analysis of the “Dutch disease,” a term 
coined in 1977 during a natural gas boom in the Netherlands, identified how 
natural resource exports may lead to deindustrialization because of exchange 
rate appreciation. The revenue flows toward the booming natural resource 
sector tend to raise the real exchange rate, making the manufacturing sector 
less competitive (Davis, 1995; Prebisch, 1950; Sachs & Warner, 1995).
In more recent decades, the only comprehensive coverage of this field is 
found in a two-part anthology published in 1993, called The International 
Political Economy of Natural Resources (edited by Mark Zacher). Yet here 
again, despite the promise of the anthology’s title, even these articles focus 
most often on domestic-level outcomes or individual case studies. Further-
more, many of the contributions were first published prior to the fall of the 
Berlin Wall and reflected cold war policy concerns and theoretical frame-
works. A return to this topic is clearly in order. This issue not only brings a 
fresh look at these issues, taking into account current politico-economic con-
cerns, but also incorporates lessons learned from the broader study of IPE in 
the past decades.
Scholars in this issue naturally turn to existing theoretical frameworks in 
CPE and IPE to generate expectations about how greater interdependence 
might affect resource governance. In doing so, the authors demonstrate how 
existing theories engender important debates regarding (a) whether global-
ization creates incentives for domestic actors in resource-rich countries to 
change how they govern natural resource wealth, in both a political and eco-
nomic sense,10 and (b) whether international market integration encourages 
countries—particularly resource-poor ones—to use their existing resource 
endowments more efficiently.
Our primary research question is, does globalization create incentives for 
domestic actors to use their natural resource wealth more effectively, and if 
so, how? Existing trade theories suggest that the answer is yes; globalization 
should have a positive effect on natural resource governance, ceteris pari-
bus. The theory of comparative advantage, for example, predicts that spe-
cializing in the development and production of locally abundant factors 
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646 Comparative Political Studies 44(6)
of production will encourage productivity and growth (see Wibbels & 
Goldberg, 2010). Likewise, Stolper–Samuelson (1941) theory stipulates 
that an easing of barriers to trade will lead to higher demand for abundant 
factors of production, resulting in greater returns to this factor. In simple 
terms, globalization increases the returns to the abundant factor (e.g., labor 
in poor countries) and decreases the returns to the scarce factor (e.g., capital 
in poor countries). As this growth in the abundant factor generates spill-
overs to other sectors, nations experience an increase in returns to a broad 
range of economic activities.
These theories predict that the flourishing sector exports products with the 
highest relative efficiency, given all the other products that could be pro-
duced. The extraction and management of natural resources serving as inputs 
to the production process should thus improve with greater openness. Export-
ing firms have an enhanced incentive to take measures that ensure continued 
access to the raw materials required—either directly or indirectly—in the 
production of goods and services. One obvious caveat is that processing nat-
ural resources cheaply and efficiently may hinge on the availability of 
advanced technology. But in a world of rapid and cheap communication, 
ideas and information spread quickly. Indeed, “new” growth theories argue 
that trade and capital flows are associated with the spread of technological 
innovation (Romer, 1986). Countries benefit from the knowledge and tech-
nology spillovers generated by increases in trade and capital flows (Grossman 
& Helpman, 1990); this, in turn, enables more efficient production processes 
and practices and eases the strain on natural resources.
For countries endowed with natural resources, recent trends suggest the 
exploitation of this factor is leading to economic booms, fueling GDP 
growth. These high returns to natural resource production may be more than 
just temporary surges because of spikes in global demand. The IMF (2008) 
states that the current commodity price boom is relatively unique in that it 
“has been more broad-based [including oil, metals, major food crops, and 
some beverages] and longer-lasting, and that prices have risen by more than 
usual” (p. 9).
In this issue we start with standard globalization theories and do not out of 
hand reject the IMF’s (2008) optimism that specialization in natural resource 
production could plausibly have long-lasting and positive economic effects. 
According to previous research, the wealth effect of successful trade, capital 
flows, and immigration can generate other public goods such as investment 
in infrastructure,11 education,12 and even positive political developments 
such as democracy.13 This is a significant departure from the literature on the 
“Dutch disease” in economics and studies identifying the “resource curse” in 
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Rudra and Jensen 647
political science, both of which have highlighted the negative consequences 
of natural resource exports.
Our first hypothesis is thus,
Hypothesis 1 (H1): Increasing trade, migration, and capital flows will 
promote efficiency and improve natural resource governance.
Critics, however, point out negative implications for natural resource exploita-
tion in the globalizing environment. For example, as countries grow rich 
pursuing their comparative advantage, some scholars argue that the efforts to 
meet the rising consumption demands in both developing and developed 
countries are leading to the exploitation of natural resources in unsustainable 
ways (Korten, 2001; Zammit, 2003). Others claim that globalization encourages 
governments to favor exporters’ demands, leading to the support of industry 
at the expense of sustainability (Grimes & Kentor, 2003; López, 2003). In part, 
this is because the public good aspect of sustainability—or more specifically, 
the unhindered supply of raw materials—naturally creates incentives for 
shirking and collective action problems.
With respect to countries that have been pursuing their comparative advan-
tage in natural resources, countless studies in political science have focused on 
even broader negative repercussions of this factor endowment. Domestic insti-
tutions have often played a role in limiting economic growth and political 
progress.14 This resource curse has been associated with the emergence and 
survival of authoritarian regimes, economic underdevelopment, high levels of 
corruption, and political violence, all of which are reviewed in a number of the 
contributions to this special volume.15 In short, these studies suggest the larger 
population pays a heavy price for the abundance of natural resource wealth in 
their nations.
We thus take seriously the possibility that preexisting domestic institutions 
may ensure that the gains from trade, labor, and capital flows are captured by a 
small population of political and economic elites. Indeed, what has been largelyignored in international economic models is how increasing global demand for 
natural resources can have distributional consequences beyond those transmit-
ted through the returns on factors of production. The broader literature in politi-
cal science has recognized this tension and that the final economic and political 
outcomes ultimately depend on if and how domestic institutions mediate distri-
butional conflicts caused by globalization. Research on the relationship 
between domestic political institutions and globalization has become one of the 
most vibrant in international relations and comparative politics.16 The majority 
of work in the discipline, such as Peter Katzenstein’s (1976) classic, argues that 
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648 Comparative Political Studies 44(6)
domestic politics is essential for understanding foreign policy. These works are 
illustrative of the central importance of the interrelationship between domestic 
and international politics. Scholars exploring this nexus have presented con-
vincing empirical evidence that in the presence of weak domestic political 
institutions, the positive impacts of globalization on political and economic 
outcomes do not hold (see, e.g., Ndulu, O’Connell, Bates, Collier, & Soludo, 
2007; Rodrik, 1999; Rudra, 2008).
By the same logic, particular institutions can help ensure that the benefits 
of globalization are widely distributed. These studies dovetail with more 
recent analyses on the resource curse, which argue that some institutions can 
actually help ensure that abundant resources do not make their citizen’s 
worse off, such as those promoting “accountability and state competence”(see 
Robinson, Torvik and Verdier 2006, p.450).17 Cracks in the consensus of the 
resource curse literature are becoming more evident as select scholars find 
new evidence that resource-rich nations are not necessarily destined for poor 
economic and political development (Dunning, 2005, 2008; Morrison, 2009). 
Particular institutions are likely to be critical to determining the outcomes of 
increasing global demand for natural resources and the distributional con-
flicts this may unleash (or exacerbate). Throughout this volume, the authors 
cite numerous recent studies that have taken seriously how resources can 
interact positively with domestic political and economic conditions.
We thus combine insights from this literature with the international eco-
nomic theories reviewed above and propose our final hypothesis:
Hypothesis 2 (H2): Globalization will exacerbate challenges to natural 
resource governance in countries that lack institutions that promote 
political accountability and state competence.
This approach enables us to explore the extent to which international 
market expansion interacts with domestic institutions to affect the governance 
of natural resources. The challenge moving forward is to identify which 
preexisting domestic institutions are key to overcoming challenges to natural 
resource governance.
The Impacts of Globalization on 
the Governance of Natural Resources
The articles in this issue theoretically and empirically assess the hypotheses 
discussed above. To preview the findings, the majority of articles in this issue 
reject H1, that globalization directly improves national resource governance. 
Only Jensen and Johnston posit that globalization, specifically through the 
Rudra and Jensen 649
pressures to attract foreign investment, can give political leaders the incentive 
to protect the rule of law. Yet they show that countries with rich natural 
resource endowments are more likely to renege on contracts and fail to uphold 
the rule of law. One article (Rudra) explicitly documents the negative correla-
tion between trade flows and resource governance outcomes when domestic 
institutions are not taken into account. In direct contrast, all five works present 
some evidence in favor of H2 and reveal how particular domestic institutions 
condition the impacts of globalization on resource governance. Jensen and 
Johnston focus on the importance of the rule of law, whereas Bearce and Laks 
Hutnick focus on the redistributive strategies of authoritarian governments. 
Morrison and Rudra, in turn, center on the consequences of socioeconomic 
institutions being organized along class and ethnic lines. And finally, Brooks 
and Kurtz’s analysis suggests the critical importance of institutions that pro-
mote human capital accumulation. This collection therefore unveils how 
national responses to globalization vary depending on a plethora of domestic 
institutions linked to greater (or lesser) transparency and accountability.
To elaborate, we start with the more specific question: can economic 
openness help mitigate the resource curse? Four articles in this special issue 
explore two dimensions of the resource curse, the political dimension 
(authoritarianism, the lack of rule of law, etc.) and the economic dimension 
(low economic growth). The general conclusion from the collection is that 
capital flows (Jensen and Johnston), trade revenues (Morrison), and migra-
tion (Bearce and Laks Hutnick) ultimately exacerbate the political resource 
curse, but under certain circumstances, trade flows might be able to alleviate 
the economic resource curse (Brooks and Kurtz).
Jensen and Johnston’s analysis reveals how international capital flows can 
aggravate both the economic and political dimensions of the resource curse. 
They begin with a stylized fact: In an era of increasingly mobile capital, 
political elites in all countries have incentives to attract international capital. 
They argue that natural resources represent a lure for foreign investors and 
provide rulers with an incentive to neglect the rule of law and, thereby, 
weaken state accountability. Leaders in natural-resource-rich countries can 
expropriate from international investors and break contracts with firms with 
fewer economic repercussions than resource-poor countries. Thus, authori-
tarian leaders are relatively insulated from backlashes from international 
capital markets. Jensen and Johnston’s develop a formal model of this rela-
tionship between natural resources and the rule of law and test this model 
using a cross-sectional data set of country risk ratings from the political risk 
insurance industry. They find that countries with large natural resource 
endowments have dramatically higher levels of political risk. In general, this 
relationship among foreign investment, resources, and political incentives is 
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650 Comparative Political Studies 44(6)
an alternative explanation for the weak rule of law in many resource-rich 
countries. One obvious implication of Jensen and Johnston’s finding on the 
correlation between capital flows and the weak rule of law in resource-rich 
countries is that economic growth (i.e., the economic resource curse) may also 
be adversely affected.
Focusing on a different feature of globalization—international labor 
mobility—Bearce and Laks Hutnick come to a similar conclusion regarding 
the negative effects of globalization on the political resource curse. Since 
many natural resource-dependent economies tend to be labor scarce, nations 
must “import” foreign labor to help develop their resource base. The problem, 
according to Bearce and Laks Hutnick, is that greater immigration makes 
democratization less likely. Building on the arguments of Acemoglu and 
Robinson (2000, 2001, 2006), Bearce and Laks Hutnick posit that the increase 
in the pool of labor leads to a credible threat of revolution, so that elites face 
potential challenges from a coalition of domestic and foreign workers. These 
credible challengers lead incumbents to provide levels of redistribution that 
co-opt the opposition and ultimately lower the chances for democratization. 
Using rigorousstatistical analysis and a series of short case studies, Bearce 
and Laks Hutnick find empirical support for their theory that natural resources 
lead to dramatic inflows of immigrants (in labor scarce economies) and that 
this growing migrant population provides incentives for elites to redistribute 
and repress. They show that the countries that avoided the negative political 
consequences of natural resource endowments are countries that are not 
dependent on migration for the harnessing of their natural resources.
Like Bearce and Laks Hutnick, Morrison also suggests that globalization—
in this case in the form of increasing trade revenues—can exacerbate the 
political resource curse, by giving leaders the means with which to buy off 
opposition groups. Building on his previous theoretical work, he closely 
examines the impact of globalization on Kenya and Mexico and explores 
how and why these two nations managed to maintain authoritarian regimes in 
certain periods. He argues that globalization dramatically affects the nontax 
revenues accruing to these states—for example, by increasing global demand 
for natural resources—and that leaders direct increased government revenue 
from trade toward restless groups to keep them from revolting. Exactly how 
and to whom the government directs the resources depend on existing socio-
economic institutions; in the Mexican case, allocations have been along class 
lines, whereas in the Kenyan case, nontax revenues have been targeted to 
politically important ethnic groups. These different allocation patterns have 
had major implications: In Mexico, social spending rose substantially as non-
tax revenue increased, but in Kenya social spending was unresponsive to 
Rudra and Jensen 651
such changes. Ultimately, Morrison helps us understand how once positive 
shocks in the international environment occur, socioeconomic institutions 
condition the way in which leaders of resource-rich countries maintain authori-
tarian control.
Brooks and Kurtz examine how the effects of globalization on the eco-
nomic resource curse are conditioned by institutions that promote investment 
in human capital. In their analysis, the positive spillover effects of trade—the 
diffusion of advanced technology, in particular—can create incentives for the 
state to create linkages between the resource sector and the broader economy 
and improve both the quantity and quality of public good provision. The 
caveat is that countries must have preexisting investments in human capital. 
Mirroring some recent work on the positive impacts of trade and investment 
on economic growth, Brooks and Kurtz find that human capital stocks affect 
the relationship between globalization and natural resources. States will thereby 
have a necessary means to leverage natural resources wealth and induce the 
transfer of technology, create linkages between the resource sector and the 
broader economy, and improve the quantity and quality of public goods pro-
vision. Economic outcomes further improve as globalization brings forth 
greater opportunities for the diffusion of advanced technology; deeper human 
capital stocks make it possible for the new technologies to be absorbed into 
local production processes with spillovers for the broader economy. In an 
empirical analysis of up to 98 countries from 1979 to 2000, Brooks and Kurtz 
find that natural resource production can generate higher levels of economic 
growth, but only in countries that have higher levels of human capital.
Domestic institutions similarly affect the governance of scarce natural 
resources. Rudra’s article directly addresses the question of whether global-
ization creates incentives for domestic actors to more efficiently manage 
scarce resources. Although she focuses specifically on the effects of export 
pressure on potable water, she suggests that the logic of her analysis may be 
applied equally well to other scarce natural resources such as arable land, 
forests, and fisheries. Rudra hypothesizes that, in the absence of conflict-
mediating domestic institutions, export pressures will have a negative effect 
on the availability of potable water. This is because most developing coun-
tries tend to have a comparative advantage in exports that are highly water 
intensive (e.g., agriculture, textiles, iron, and steel). Expanding trade thus 
leads to more intense exploitation of this natural resource for two intercon-
nected reasons: (a) exporters place great demands on existing water supplies, 
in terms of both use and wastewater discharge, and (b) governments are less 
apt to regulate industries because of the state’s growing reliance on foreign 
exchange. Statistical tests of her argument and case examples from India and 
Elia
Realce
652 Comparative Political Studies 44(6)
Vietnam support her predictions, lending credence to globalization’s critics 
who argue that openness encourages governments to favor the demands of 
capital over other interest groups. Yet despite this inherent tension between 
globalization and natural resources, Rudra argues that domestic politics can 
mitigate (or exacerbate) these effects. The impact of export pressures will be 
particularly acute in nations with great income disparity, since (as is clear 
from the political economy literature) highly unequal developing economies 
tend to be more divisive and have weak conflict-mediating institutions over-
all. In contrast, more egalitarian societies may find it easier to mobilize and 
ensure access to safe water despite rapid expansion in international trade.
Broader Contributions and Moving Forward
In sum, this special issue provides a diverse set of articles on the relationship 
between globalization and the governance of natural resources. The articles 
provide substantive contributions to literatures in comparative and interna-
tional politics and make specific contributions to our understandings of the 
politics of natural resources, and particularly the resource “curse.” By incor-
porating globalization into our analysis of natural resources, these articles 
offer new understandings of the relationship among politics, resource gover-
nance, and economic openness. To begin, our findings support the studies in 
economics and political science that show that global market expansion can 
improve the well-being of citizens, provided that the requisite institutions are 
already in place. Yet our studies also take seriously the complex effects of 
globalization on the politics of natural resources and governance in general.
First, the central theme that emerges in this special issue is that domestic 
political variables mediate the impacts of globalization on natural resource 
management. The articles in this special issue explore this theme and identify 
how different types of institutions affect natural resource governance and 
mediate the impact of globalization. The institutions we focus on are differ-
ent from the conventionally accepted “strong” domestic institutions such as 
democracy, organized labor movements, domestic courts, and a meritorious 
bureaucracy.
For example, both Rudra and Morrison suggest that socioeconomic 
institutions—specifically those related to ethnic diversity and income 
inequality—significantly condition how globalization affects the use of natu-
ral resources and their revenues. Rudra finds that more homogenous nations 
may be in a better position to experience improvements in the governance of 
natural resources, whereas Morrison finds that the nature of heterogeneity in 
a country matters for how governments allocate their windfall gains. The 
Rudra and Jensen 653
importance of these kinds of institutions has been largely ignored in studies 
of both globalization and the resource curse, and the works here suggest that 
further examination of their effects is warranted.
In a similarvein, Brooks and Kurtz argue that domestic institutions, spe-
cifically the formation of human capital, are central to understanding the 
impact of globalization and natural resource production on economic growth. 
Preexisting stocks of human capital are key to ensuring that globalization 
will lead to good governance outcomes in research-rich countries. Their anal-
ysis thus provides answers to why some governments avoid the “curse” of natu-
ral resources, whereas others find that the exploitation of natural resources 
generates negative consequences for economic growth.18
Second, we specifically address how globalization can affect incentives of 
domestic actors in resource-rich countries. The analyses of Bearce and Laks 
Hutnick and Jensen and Johnston allow us to explore how national responses 
to economic openness might differ in resource-rich countries. Both studies 
examine how elites face distinct incentives in resource-rich nations, which 
condition their reaction to globalization. According to Bearce and Laks Hutnick, 
the immigration flows often associated with natural resource wealth can have 
perverse impacts on democratization by providing elites the incentives to co-
opt citizens through redistribution. Jensen and Johnston contrast resource-
rich and resource-poor countries by examining the incentives of elites in 
these two types of countries to uphold the rule of law in a global economy. 
Elites in resource-rich countries have less incentive to uphold the rule of law 
in efforts to facilitate investment. The extent of natural resource endowments in 
a country can thereby provide an insight into differences across countries 
in their level of bargaining power with foreign investors and, related, extent 
of political risk.
A third contribution is to encourage political science scholars—particularly 
scholars who focus primarily on resources that are domestically abundant 
(the resource curse)—to take scarce natural resources more seriously. Direct-
ing attention to natural resources such as water is helpful to this debate 
because it represents a globally diminishing resource that is critical to (export) 
production and human life. Rudra’s analysis helps emphasize that the com-
plex political battles that can emerge over natural resources—in response 
to economic openness, for example—are not limited to countries that are 
resource rich.19
Ultimately, this special issue represents a step forward in the broader pro-
cess of exploring the relationship between economic openness and resource 
governance. We hope that the articles in these pages will convince scholars 
of the critical importance of this debate and encourage them to tackle the 
654 Comparative Political Studies 44(6)
many questions and puzzles that remain. We have included in this issue stud-
ies that analyze the impacts of trade, international capital, and migration. But 
how might other international political and economic factors—such as inter-
national organizations such as the World Bank, the IMF, or the United Nations—
affect resource governance?
Many other questions remain. This collection only scratches the surface 
on how domestic institutions mediate the effects of globalization on natural 
resource governance. A much wider range of institutions can mediate this 
impact. Obvious candidates include electoral systems or variations in author-
itarian regimes. Less obvious are recent nongovernmental organization activi-
ties, such as the Extractive Industries Transparency Initiative, that focus on 
increasing transparency in the deals struck between international investors 
and domestic governments. Moreover, the studies in this issue focus primar-
ily on natural resources such as oil and water. How might globalization affect 
other types of natural resources? Answering this question will lead to addi-
tional testing and theoretical refinement about the globalization–resource 
governance nexus. Finally, how do natural resources affect international 
politics? How do they shape the incentives and ability to sign international 
trade and investment agreements, the forging of durable bilateral and regional 
economic treaties, or participation in the major multilateral organizations 
such as the World Trade Organization and the IMF? We hope this special issue 
helps to forward a research agenda that can address these important questions.
Acknowledgements
We would like to thank James Caporaso, Ronald Rogowski, Peter Rosendorf, and 
Dennis Quinn for their helpful comments. Special thanks to Benjamin Cohen and 
Kevin Morrison for their very detailed suggestions. We would also like to thank John 
Keeler and the Graduate School of Public and International Affairs for their generous 
support and encouragement for this project.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interests with respect to the authorship 
and/or publication of this article. 
Funding
The author(s) received no financial support for the research and/or authorship of this 
article.
Notes
 1. For examples, see McMichael et al. (1999), Schrecker (1997), Bijian (2005), 
Rudra and Jensen 655
and Najam, Rummels, and Halle (2007). Examples from newspaper articles are 
Pope (1997), Sriprayoonskul (2000), “World Trade” (2005), Hanes (2001), and 
Borlongan (2002).
 2. In terms of oil, for example, the Department of Energy Information Administra-
tion released a July 2000 report that examined the long-term prospects for world 
petroleum supplies. The study finds that the peak in oil production could occur 
anywhere from 2021 to 2037 (Wood, Long, & Morehouse, 2003). The supply 
of clean water, another natural resource of global concern, is currently facing a 
“worldwide water crisis,” according to the United Nations and other international 
organizations; they are referring to the availability of global water resources rela-
tive to growing human demand.
 3. This removal of barriers leads to more flows, but also in the convergence of 
domestic prices to world prices.
 4. To identify developing countries, we use the World Bank’s definition of low-, 
lower-middle-, and upper-middle-income countries. According to the World 
Bank, economies are divided according to 2008 gross national income per capita, 
calculated using the World Bank Atlas Method. The groups are $975 or less (low 
income), $976 to $3,855 (lower middle income), $3,856 to $11,905 (upper middle 
income), and $11,906 or more (high income).
 5. For descriptive purposes we use flows as a proxy for openness. Although some of 
the increases in foreign direct investment and trade can be driven by decreasing 
transportation costs, there is a general consensus that countries have dramatically 
lowered barriers to international trade and foreign direct investment. See Jensen 
(2006) for a discussion of foreign direct investment policy.
 6. Some argue that international migration flows have reached—and even slightly 
surpassed—the levels of the 19th century, though this is still a matter of some 
debate. See Samers (1999) and Zlotnick (1999).
 7. A complete review of this literature is beyond the scope of this introduction. See 
Keohane and Milner (1996), Boix (1998), and Garrett (1998) for examples.
 8. We refer to diminishing natural resources as (a) available in all countries (albeit to 
different degrees) but current demand is outpacing supply and (b) nonrenewable 
or extremely slow to replenish.
 9. To conduct this analysis, we have made a concerted effort to include scholars 
who have not previously been directly engaged in the natural resource literature. 
We believe that this not only brings new theories and data into an exploration of 
the relationship between resources and governance but also facilitates linkages 
between scholarship on resources and politics and other areas of comparative 
politicsand international relations.
10. In this issue, we take the position that the management and extraction of natu-
ral resources will be more productive in resource-rich nations if leaders direct 
656 Comparative Political Studies 44(6)
resource rents toward investments and policies that help economic growth as 
well as toward improving the quality of life (e.g., greater democracy) for the 
majority of citizens.
11. Works such as Garrett (1998) argue that globalization can lead to the invest-
ment in public goods, such as infrastructure. Cai and Treisman (2005) construct 
a formal model of political incentives to invest in public goods. Their model 
shows that competition for global capital can lead to an increase in infrastructure 
(or other “business-friendly” policies), although this result is conditional on the 
initial endowments of countries. In some cases, capital mobility can lead to less 
investment in “business-friendly” policies in poorly endowed countries.
12. Gylfason (2001) finds that natural resources lead to lower levels of investment in 
education, and Papyrakis and Gerlagh (2004) show that this is an important trans-
mission mechanism that leads natural-resource-rich economies to have lower lev-
els of economic growth. Stijns’s (2006) results point to an opposite relationship, 
where certain types of resources increase human capital accumulation. More 
generally, there is growing understanding that there are multiple responses to 
internationally generated resource wealth rents, just as there are different policy 
responses to globalization. The “varieties of capitalism” literature (see Hall & 
Soskice, 2001) and Garrett (1998) show that there are numerous different strate-
gies to achieve economic growth, including investments in human capital.
13. As cited earlier, Dunning (2008) finds that natural resources can have complex 
impacts on political regimes. For broader works on the relationship between glo-
balization and democracy, see Rudra (2005), Eichengreen and Leblang (2008), 
Li and Reuveny (2009), and Milner and Mukherjee (2009). Globalization can also 
have an indirect impact by raising the overall level of development. Przeworski, 
Alvarez, Cheibub, and Limongi (2000) argue the strong correlation between 
democracy and development is the result of the fact that although democracy is 
fragile and prone to collapse in poor countries, democratic institutions endure in 
wealthy countries.
14. For recent reviews on the complex relationship between institutions and resources, 
see Bulte, Damania, and Deacon (2005), Brunnschweiler (2008), and Alexeev 
and Conrade (2009).
15. For examples of the political and economic dimensions of the resource curse, 
see Mahdavy (1970), Auty (1994), Karl (1997), Ross (2001, 2006), Jensen and 
Wantchekon (2004), and Bulte et al. (2005).
16. For example, see Keohane and Milner (1996). Note that a limited number of 
influential works have argued that globalization has largely erased domestic poli-
tics, forcing governments to adopt a common set of neoliberal economic policies. 
For example, see Andrews (1994), Cerny (1990), and Kurzer (1993).
17. For work on the differential effects of the resource curse, also see Karl (1997), 
Mehlum, Moene, and Torvik (2006), Boschini, Pettersson, and Roine (2007), 
Rudra and Jensen 657
Anderson and Aslaksen (2008), Brunnschweiler (2008), and Dunning (2008). 
See Jones Luong and Weinthal (2010) for theory and empirical analysis on how 
private investment mitigates the resource curse.
18. See Alexeev and Conrad (2009) for a recent contribution on the subject.
19. For example, one aspect (which Rudra does not directly explore) is the extent to 
which water—like oil—can also be a major source of domestic and international 
conflict.
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Bios
Nita Rudra is an associate professor of international affairs at the University of 
Pittsburgh. Her research interests include the impact of globalization on social wel-
fare expenditures in developing countries, the political foundations of different 
welfare regimes, and the causes and effects of democracy in developing nations. Her 
most recent works appear in the Journal of Politics, American Journal of Political 
Science, Studies in Comparative International Development, Comparative Political 
Studies, International Organization, and International Studies Quarterly. She pub-
lished Globalization and the Race to the Bottom in Developing Countries:Who Really 
Gets Hurt? She recently completed a one-year fellowship awarded by the Council on 
Foreign Relations at the Social Development Department of the World Bank.
Nathan M. Jensen is an associate professor in the Department of Political Science at 
Washington University in St. Louis, fellow at the Center for Political Economy, and 
director for the Program on Multinational Enterprises and the Global Economy at the 
Weidenbaum Center on the Economy, Government, and Public Policy at Washington 
University. His research includes Nation-States and the Multinational Corporation, 
and his peer-reviewed articles include publications in the American Journal of Politi-
cal Science, Journal of Politics, International Organization, Comparative Political 
Studies, Journal of Conflict Resolution, Journal of Law and Economics, Review of 
International Organizations, and International Interactions.