Sustainable finance
Rentier State
A state financed mainly by rents from exporting natural resources rather than by taxing its citizens — with consequences for governance and transition.
Definition
A rentier state is one that derives a substantial share of its revenue from external rents — payments for natural resource extraction, principally oil and gas — rather than from domestic taxation. The concept, originating with Hossein Mahdavy's study of Iran, links revenue structure to governance: states that tax resources rather than citizens face weaker accountability pressures, develop distributive rather than productive institutions, and concentrate power around rent allocation.
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