Rentier state
Encyclopedia
A rentier state is a term in political science
and international relations
theory used to classify those states
which derive all or a substantial portion of their national revenues from the rent
of indigenous resources to external clients.
concepts.
The term is most frequently applied to states rich in highly valued natural resources
such as petroleum
; however, it can also be applied to those nations which trade on their strategic resources (such as permitting the development of an important military base
in their territory). Dependent as they are on this source of income, rentier states may generate rents externally by manipulating the global political and economic environment. Such manipulation may include monopolies, trading restrictions, and the solicitation of subsidies or aid
in exchange for political influence.
and democratization
. Hence, theorists such as Beblawi conclude that the nature of rentier states provides a particular explanation for the presence of authoritarian regimes in such resource rich states.
Beblawi identifies several other characteristics particularly associated with rentier oil states. For example, where the government is the largest and ultimate employer, the bureaucracy
is frequently bloated and inefficient – and indeed comes to resemble a rentier class in society. Moreover, local laws often make it impossible for foreign companies to operate independently. This leads to a situation where citizenship becomes a financial asset. In order to do business, foreign enterprises engage a local sponsor (al-kafil) who allows the company to trade in his name in return for a proportion of the proceeds – another type of rent. In addition, the oil rent leads to secondary rents, usually stock market or real estate speculation.
The crucial nature of oil has led to a situation where non-oil states have started to behave like rentier states. This can be seen for the region as a whole – so some states have been able to exploit location rent due to their strategic location, for example, military bases. More significantly, inter-state relations in the region have been affected as oil states try to ensure stability and tranquillity for their rent by buying allegiance from neighbouring states – in effect, sharing the oil rent. Beblawi highlights the case of Egypt whose receipt of financial aid from oil rich neighbours declined significantly after Camp David
, and money going instead to Iraq, Syria and the PLO who were considered more assertive.
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
and international relations
International relations
International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...
theory used to classify those states
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...
which derive all or a substantial portion of their national revenues from the rent
Economic rent
Economic rent is typically defined by economists as payment for goods and services beyond the amount needed to bring the required factors of production into a production process and sustain supply. A recipient of economic rent is a rentier....
of indigenous resources to external clients.
Usage
The term rentier state has only been used since the 20th century. It is thought to have originated from Karl Marx's rentier capitalismRentier capitalism
Rentier capitalism is a term used in Marxism and sociology which refers to a type of capitalism where a large amount of profit-income generated takes the form of property income, received as interest, intellectual property rights, rents, dividends, fees, or capital gains.The beneficiaries of this...
concepts.
The term is most frequently applied to states rich in highly valued natural resources
Natural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
such as petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
; however, it can also be applied to those nations which trade on their strategic resources (such as permitting the development of an important military base
Military base
A military base is a facility directly owned and operated by or for the military or one of its branches that shelters military equipment and personnel, and facilitates training and operations. In general, a military base provides accommodations for one or more units, but it may also be used as a...
in their territory). Dependent as they are on this source of income, rentier states may generate rents externally by manipulating the global political and economic environment. Such manipulation may include monopolies, trading restrictions, and the solicitation of subsidies or aid
Aid
In international relations, aid is a voluntary transfer of resources from one country to another, given at least partly with the objective of benefiting the recipient country....
in exchange for political influence.
Formal definition
Hazem Beblawi suggested four characteristics that would determine whether or not a state could be identified as rentier:- if rent situations predominate
- if the economy relies on a substantial external rent – and therefore does not require a strong domestic productive sector
- if only a small proportion of the working population is actually involved in the generation of the rent
- and, perhaps most importantly, which the state’s government is the principal recipient of the external rent.
Outcomes
Consequently in these resource-rich rentier states there is a challenge to developing civil societyCivil society
Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...
and democratization
Democratization
Democratization is the transition to a more democratic political regime. It may be the transition from an authoritarian regime to a full democracy, a transition from an authoritarian political system to a semi-democracy or transition from a semi-authoritarian political system to a democratic...
. Hence, theorists such as Beblawi conclude that the nature of rentier states provides a particular explanation for the presence of authoritarian regimes in such resource rich states.
Beblawi identifies several other characteristics particularly associated with rentier oil states. For example, where the government is the largest and ultimate employer, the bureaucracy
Bureaucracy
A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...
is frequently bloated and inefficient – and indeed comes to resemble a rentier class in society. Moreover, local laws often make it impossible for foreign companies to operate independently. This leads to a situation where citizenship becomes a financial asset. In order to do business, foreign enterprises engage a local sponsor (al-kafil) who allows the company to trade in his name in return for a proportion of the proceeds – another type of rent. In addition, the oil rent leads to secondary rents, usually stock market or real estate speculation.
The crucial nature of oil has led to a situation where non-oil states have started to behave like rentier states. This can be seen for the region as a whole – so some states have been able to exploit location rent due to their strategic location, for example, military bases. More significantly, inter-state relations in the region have been affected as oil states try to ensure stability and tranquillity for their rent by buying allegiance from neighbouring states – in effect, sharing the oil rent. Beblawi highlights the case of Egypt whose receipt of financial aid from oil rich neighbours declined significantly after Camp David
Camp David Accords
The Camp David Accords were signed by Egyptian President Anwar El Sadat and Israeli Prime Minister Menachem Begin on September 17, 1978, following thirteen days of secret negotiations at Camp David. The two framework agreements were signed at the White House, and were witnessed by United States...
, and money going instead to Iraq, Syria and the PLO who were considered more assertive.
External links
- What is a Rentier State?
- State Formation Processes in Rentier States: The Middle Eastern Case
- Rentier States and Democratization
- The Rentier State Model and Central Asian Studies: The Turkmen Case
- Dauderstädt, Michael: Dead Ends of Transition Rentier Economies and Protectorates
- Ismail Küpeli: Keine Demokratie im Rentierstaat Syrien? Munich 2008, ISBN 978-3-640-11110-7 (ebook about the rentier state Syria)