What’s the link between Oil and Freedom (Part 1)?

Now my brief ode to Elon Musk wasn’t without purpose. It was just an introduction to who the world should thank when the world finally stops being a sop and gets over its obsession with fossil fuels. In my head, development for countries goes a little like this:

  1. Country is poor.
  2. Country encourages trade as well as technological development.
  3. Citizens demand rights and personal freedoms in return, which country grants.
  4. Country is rich.
  5. Country exerts influence over other countries.

Now my problem with fossil fuels is that they take undeserving countries from step 1, straight to step 4. This is bad as the country has not actually developed, much like a child who never went to school but got given a high school diploma for free anyway – he’s rude, brash and will probably give you an atomic wedgie if you disagree with him.

So my question goes like this: Does access to Oil affect the way a country develops and the freedom of its citizens?

For ‘Access to oil’ I can use the % of total exports which are fuel –  easy to find thanks to the World Bank. Citizens’ freedom is a little more abstract, but the Cato Institute has recently released a fantastic publication where a multitude of countries are rated on a scale of Personal Freedom. A description for the index is as follows:

The index captures the degree to which people are free to enjoy the major freedoms often referred to as civil liberties—freedom of speech, religion, and association and assembly in the countries in the survey. In addition, it includes indicators on rule of law, crime and violence, freedom of movement, and legal discrimination against same-sex relationships. We also include five variables pertaining to women’s freedom that are found in various categories of the index.

As the Index was measured over the period of 2008-12, then the Fuel % variable will be averaged over that period. This also allows me to use a larger sample too as many countries have missing data for individual years. Here goes:


OilAll

There’s a definite negative trend, but many countries seem scattered all over the place. It’s visible though that the scattered countries are generally of low GDP per Capita (labelled by colour). This makes sense as these countries are still poor, whether they have oil or otherwise, and hence are still stuck on step 1. I wanted to confirm this:

gdp

Again, there’s a strong positive trend between GDP per Capita and freedom, but in this case it’s logarithmic. It appears to level out and lose its variance at around $10,000, hence I can remove all values below that threshold:

Oil10

Ah, that’s better. There’s a clear trend and the p-value is < 0.0001 – clearly significant! Although of course, this is only correlation and does not necessarily mean causation. A few reasons for caution:

  • A large proportion of the low freedom countries are Islamic Middle Eastern countries, hence this may well be due to culture. A large proportion of the world’s oil is located there and hence location may well be a confounding variable.
  • Social issues are complex and there will be multiple variables which will affect a country’s freedom. It may well be impossible to find them all.

I’ll be attempting to find all the variables and gain some insight for what that means for the future of the world in Part 2. See you then!

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