Oil Curse, Islamic Constitutions, and Democracy

There is an ongoing debate on the relationship between Islam, oil wealth and (lack of) democracy. Considerable literature shows that Islam, represented as an informal institution by Muslim population share, has a negative effect on democracy, especially in oil-rich economics. This study examines the effects of formal institutions, specifically constitutions that prescribe Shari'a law as a source of legislation, on democracy. We use a newly developed coding of the degree to which Islam is incorporated in constitutions. Our empirical results show the constitutional entrenchment of Islamic supreme values has a negative and significant effect on democracy. This relation remains robust when controlling for other variables, including Muslim population share, oil and gas rents, and per capita GDP as well as employing instrumental variable regressions. Our results show that Islamic constitutionalism, and not oil curse, is the main reason for democracy deficit in Muslim-majority countries. However, we find no evidence that Islam is inimical to democracy when not entrenched in the constitution