The unequal distribution of external income in rentier states has thus a negative effect on political liberalism and economic development.
He shows that in the Middle East governments and companies are able to make larger profits through monopolistic positions and price fixing.
[3][4] They expanded on the more economic analysis of Mahdavy[8] by looking at the potential social and political effects of rentierism and focused on how rents were distributed and generated.
According to Beblawi an essential characteristic of rentier states is the fact that only a few are engaged in the generation of rent (wealth) and a majority involved in the distribution or utilization of it.
[17] According to political scientist Gerasimos Tsourapas, states hosting forcibly-displaced population group(s), or refugee rentier states, may seek to strategically extract outside income linked to their treatment of these group(s), as in the cases of Jordan, Lebanon, and Turkey in the context of the Syrian refugee crisis.
[18] Building on international relations theory and work by Kenneth A. Oye, Tsourapas differentiates between blackmailing and backscratching refugee rent-seeking strategies.
[19] Dependent upon it as a source of income, rentier states may generate rents externally by manipulating the global political and economic environment.
[3][22] African states such as Nigeria, Gabon, Angola, Ghana, Uganda and South Sudan are also important oil producers with rentier economies, earning income from trading natural resources.
[26] Moreover, because control of the rent-producing resources is concentrated in the hands of the authorities, it may be used to alternately coerce or coopt their populace, while the distinction between public service and private interest becomes increasingly blurred.
For example, where the government is the largest and ultimate employer, the bureaucracy is frequently bloated and inefficient – and indeed comes to resemble a rentier class in society.
To do business, foreign enterprises engage a local sponsor (kafil) who allows the company to trade in his name in return for a proportion of the proceeds – another type of rent.
Abulof points to political legitimacy as a determining factor, and argues that authoritarian rentier regimes are in fact more fragile than they seem to be.
Beblawi highlights the case of Egypt whose receipt of financial aid from oil-rich neighbours declined significantly after Camp David, and money going instead to Iraq, Syria and the PLO who were considered more assertive.
Such dominance was not the intention of Luciani:[4] Indeed, it has never been my understanding that the rentier state paradigm should be either the sole or the overwhelming tool of interpretation of the political economy of oil-producing countries.
I believe that reliance on a stream of rent accruing directly to the state from the rest of the world is an important consideration, but surely not the only one.Michael Herb criticizes the relationship between rentierism and regime type.