Declining Oil Production Leads to More Democratic Governments

Many oil-rich countries have authoritarian governments. How will these governments be affected by a global transition away from fossil fuels? We use new, detailed oil data and an event-study design to analyze political change in 36 oil-producing countries that experienced at least 10 years of declining production. We find that when their production starts to decline, they become significantly more democratic, relative to both the overall sample trend and the parallel pre-peak trends. Ten years after their oil peak, 33 of the 36 countries had become more democratic. After 15 years, their relative democracy scores increased by an average of 9 percentage points. For countries that transitioned after 1980, these scores rose about 13 percentage points, and for larger producers, by about 20 percentage points. Our findings suggest that a global transition toward renewable energy may make the governments of oil-rich countries significantly more democratic.