Does oil corrupt? Evidence from a natural experiment in West Africa

Pedro C. Vicente
Trinity College Dublin, Department of Economics, Arts Building, Dublin 2, Ireland
CSAE — Centre for the Study of African Economies, University of Oxford
BREAD — Bureau for Research and Economic Analysis of Development

a b s t r a c t

This paper explores the oil discovery announcements in Sao Tome and Principe (1997–1999) to assess the
role of natural resources in determining corruption. For this purpose, we use a natural experiment
framework which contrasts Sao Tome and Principe to Cape Verde, a controlWest African country sharing the
same colonial past and important recent economic and political shocks. Our measurement is based on
tailored household surveys we conducted in both island countries. The unique survey instrument was
retrospective and used personal histories to elicit memories from the respondents. We analyze changes in
perceived corruption across a wide range of public services and allocations. We find clearest increases on
vote buying, education (namely in the allocation of scholarships) and customs, ranging from 31 to 40% of the
subjective scale. We interpret these findings as symptoms of increased competition for core state resources.