Unconditional Transfers Are Not Oil: The Economic Foundations of Subnational Undemocratic Regime Reproduction

Extant research on rentierism claims that oil royalties and unconditional transfers are among the main factors sustaining subnational undemocratic regimes (SURs). This article claims that these revenues are insufficient to economically reproduce SUR, as subnational rentier states generally overspend beyond their means. Drawing on evidence from Argentina, we identify two pathways to SUR reproduction. First, rulers in resource-rich provinces rely on ‘hidden rents’ from local extractive industries to sustain long-term spending. Second, rulers in resource-poor provinces heavily subsidised by fiscal institutions resort to discretionary grants from presidents to reproduce their political regimes.     

The contradictions of neo-extractivism and social policy: the role of raw material exports in the Brazilian political crisis

This article explores how contradictory development tendencies within Brazil’s primary sector have contributed to the country’s enduring political crisis. I show that President Rousseff, when dealing with declining royalty payments from natural resource exports and a decrease in tax revenue from imports, financed social policies in ways that her opponents branded as unconstitutional to remove her from power. After documenting the central players within the political crisis, namely those who have been under investigation in Operação Lava Jato (Operation Car Wash), I illustrate how the ongoing corruption scandals plaguing Brazil have their roots in the country’s raw material export industries.