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date: 10 December 2023

rentier state 

A Dictionary of Business and Management in the Middle East and North Africa

Mark Neal

A theoretical construct developed by Hazem Beblawi and Giacomo Luciani, which categorizes some countries in terms of their disproportionate reliance upon one or several inherited sources of rents, such as mineral resources, notably oil and gas. Petrochemical-rich rentier states gain much of their income through the extraction, processing, and shipping of these resources. Governments in these countries are reliant on the mineral sector for income and correspondingly less reliant on other sources of income, such as that obtained through the taxation of their citizens. The social contract in such states thus differs to those with taxation and democratic representation. Instead, rentier-state political systems tend to be characterized by autocratic paternalism, with the government redistributing mineral wealth through free education and healthcare, infrastructural development, and systems of subsidies, particularly of energy and facilities. The media is commonly highly censored in such states, meaning that government and corporate corruption and institutional inefficiencies are underreported in public discourse. This sustains inefficiencies and encourages the mass expansion of the state into all areas of public and private life. Rentier states may be rich and their citizens may enjoy high incomes relative to their neighbours; however, such inefficiencies can undermine the welfare, creativity, freedoms, and human development of their peoples. They may stifle entrepreneurialism and economic diversification and sustain a lack of preparedness for when their resources are depleted or when demand disappears.... ...

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