Petro Rents and Hidden Wealth: Evidence from Bank Deposits in Tax Havens

New mimeo by four Scandinavians:  Who benefits from natural resource rents? Work on the resource curse suggests that such rents fail to reach broader populations in resource rich countries, but where, then, do rents go? We study the transformation of rents from oil and gas extraction into hidden personal wealth using a unique dataset on bank deposits in tax havens. We find that a dollar increase in oil and gas rents in autocracies increases the value of bank deposits in tax havens by around 2 percent while there is no such effect for democracies. Elections and political conflict also increase the hidden wealth of autocracies notably when they are rich in oil and gas. The results suggest that at least 8 percent of petroleum rents are converted into personal political rents in countries with poor political institutions.