Income growth, ethnic polarization, and political risk: Evidence from international oil price shocks

We explore the effects of growth in countries' national incomes on political risk. * IV estimation is used to this end. * We find that income growth has a negative effect on countries' political risk. * The marginal growth effect on political risk decreases with ethnic polarization. This paper studies the effects of growth in countries' national incomes on political risk. To address causality, we use the annual growth rate of the international oil price weighted with countries' average oil net-export GDP shares as an instrument for national income growth. Our instrumental variables analysis yi... Mehr ...