What is a Rentier State?

• A. A country that relies on domestic manufacturing for growth
• B. A country that imports most goods
• C. A country with a large service sector
• D. A country that obtains lucrative income by exporting raw materials or leasing out natural resources to foreign companies

Answer: (D)

A Rentier State relies mainly on external rents for its revenue—money paid to the state from resources or concessions rather than taxes collected from its own people or profits from domestic production. In practical terms, the government earns large, stable income by selling the country’s natural resources to foreign buyers or by leasing out mineral or oil rights to foreign firms. This external income funds public spending without needing strong tax collection or broad domestic industry.

That’s why the statement about obtaining lucrative income by exporting raw materials or leasing out natural resources to foreign companies is the best fit. It captures the essence of external rents that propping up the state budget without relying on citizens’ taxes or domestic manufacturing. The other options describe different economic bases—manufacturing, high reliance on imports, or a large service sector—that do not reflect the rentier model.