A Dilemma of Being a Rentier State - Essay Example

The paper "A Dilemma of Being a Rentier State" is an outstanding example of an essay on politics. Rentier theory is concerned with how countries that have a single wealth resource that is commonly responsible for the countries’ revenue. The most common resource associated with this theory is oil. Most oil countries are faced with what is commonly referred to as ‘the resource curse’ which brings about some dilemmas. One of the problems comes about when the state gets most of its income or rent from this external source. This eliminates the need for the state to be dependent on its domestic income (Yates, p. 15). Most of this income comes to the government which is responsible for its dispensation. Hence the government can embark on spending without getting the taxpayers involved. This can easily lead to a lack of accountability as the government does not have to justify to anyone on its spending. This can be reduced by the state having transparent accountability programs where the taxpayers can know how the government spending is done. This will improve how the funds are dispensed. 

            Another dilemma of being a rentier state comes about due to the dependence of the external market since they are highly vulnerable to rapid external price shocks. Whenever the market crashes or a problem is encountered, their markets will be in problems and their economies brought to their knees. Most of the industries in these states all stem from this resource, and when the market is shaken, related industries are shaken as well (Yates, p. 23). In this case, the states should have a fall back plan or try diversifying their economy. This will shield them from the economic shock that will be brought about by the price shocks and fluctuations.

            Labor distortion is another significant problem faced by rentier states. In these states, the earning of those in the oil industry, for example, will affect the salaries and wages in other sectors (Yates, p. 29). This brings about an imbalance because in these states’ most workers are preoccupied with joining the ‘booming oil industry’, instead of focusing on productivity (Yates, p. 29). This, in turn, results in the influx of immigrants seeking the same opportunities in these states. When the industry suffers a blow, these same workers are the first ones to be removed. These states should nurture a mentality that their workers should be more concerned about achieving productive efficiency than joining the oil industry. They should not only focus on resource-related job opportunities, but also on jobs in other sectors.

In the rentier economies, due to little production, taxation also is reduced. Because of the large revenues that the government collects from the external resources, they are given the mandate by coffers to govern without paying the political price. In production states, tax collection serves two purposes; the generation of revenues and the equal redistribution of the revenue and wealth in society. Without taxes, the government has liberated itself from this scrutiny. This drives the opposition of such governments to be more concerned about how the wealth is distributed, rather than focusing on the underlying state dysfunction. The formation of government watchdogs would shed some light on these operations, and ensure that it gets involved in the indigenous private sector (Yates, p. 211).