The Logic of Violence in Civil War: List of Tables and Figures

Are natural resources a “curse” or a “blessing”? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.

Natural Resources: Curse or Blessing?

Are natural resources a "curse" or a "blessing" The empirical evidence suggests that either outcome is possible. This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization, and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in nondemocratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.

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The History of Economic Analysis

Many oil, mineral, and plantation crop-based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s. This article illustrates how countries dependent on point source natural resources (those extracted from a narrow geographic or economic base, such as oil and minerals) and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity. This in turn impedes their ability to respond effectively to shocks, which previous studies have shown to be essential for sustaining rising levels of prosperity. Analysis of data on classifications of export structure, controlling for a wide array of other potential determinants of governance, shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators. These governance effects are not associated simply with being a natural resource exporter. Countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries.

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The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth

The Maoist insurgency in Nepal is one of the highest intensity internal conflicts in recent times. Investigation into the causes of the conflict would suggest that grievance rather than greed is the main motivating force. The concept of horizontal or intergroup inequality, with both an ethnic and caste dimension, is highly relevant in explaining the Nepalese civil war. There is also a spatial aspect to the conflict, which is most intense in the most disadvantaged areas in terms of human development indicators and land holdings. Using the intensity of conflict (fatalities) as the dependent variable and HDI indicators and landlessness as explanatory variables, the authors find that the intensity of conflict across the districts of Nepal is significantly explained by the degree of inequalities.

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Spatial-Horizontal Inequality and the Maoist Insurgency in Nepal

Conflict has been a feature of human society since time immemorial. Disputes that arise may be organized around social class, ethnicity, religion, region, or some combination of these factors. The struggle can be over economic opportunities, as well as political and civil rights, among other contestable factors. In peaceful societies, conflict is channelled into nonviolent means and institutions for both its expression and resolution. Civil war is not necessarily irrational, but a product of certain objectives, therefore amenable to rational-choice analysis. In low-income countries, civil war makes poverty reduction and growth difficult to achieve. Many contemporary civil wars have an ethnic dimension, as ethnicity is a strong uniting force. Grievances, therefore, play a major part in contemporary conflict, but greed - the desire to control resources and capture rents - also enters into the calculus of conflict. Ultimately, open warfare cannot emerge inside a society with a functioning social contract, as greed and grievances are managed and conflict is contained in countries with properly operating institutions. Consequently, conflict resolution requires the reconstitution of the social contract.

Conflict, Civil War and Underdevelopment: An Introduction

War provides economic opportunities, such as the capture of valuable natural resources, that are unavailable in peacetime. However, belligerents may prefer low-intensity conflict to total war when the former has a greater pay-off. The paper therefore uses

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Conflict in Africa : The Cost of Peaceful Behaviour

This paper looks at the relationship between natural resource endowment, particularly the type associated with minerals and plantations, and economic development. It may not be natural resource endowment per se but its type that matters, when it comes to growth and development. Certain types of natural resources such as oil and minerals have a tendency to lead to production and revenue patterns that are concentrated, while revenue flows from other types of resources such as agriculture are more diffused throughout the economy. The former category is dubbed a point-source economies, while the latter type is referred to as diffuse. Most countries in the first group have been prone to growth failure in recent times, with notable exceptions such as Botswana and Indonesia. The paper reviews two sets of models, the first set outlining the onset of the resource curse, and the second category sketching conditions where resource booms actually aid growth, or policies to avoid the resource curse. The vast majority of these models stress intersectoral linkages. Political economy considerations associated with resource rents are also reviewed. The focus is on institutions that determine the policy superstructure. The importance of institutions is highlighted, followed by a sketch of institutional malfunctioning and an overview of the empirical models of institutional determination. An explicit model of growth collapse with micro-foundations in rent-seeking behaviour and contests is also presented. The empirical analysis put forward is one of the few econometric investigations into the resource curse that includes analysis over time, as it is a panel data estimation. Due to this time series property our proxy for institutional quality is the degree of democracy. Our findings suggest that a point-source type natural resource endowment does retard democratic and institutional development, which in turn hampers economic growth. Institutions and institutional functioning are the crucial link between resource endowments, geography and policies, on the one hand and economic outcomes on the other hand.

When Does Natural Resource Abundance Lead to a Resource Curse

This paper analyzes problems of implementing noneconomic conditionality, such as military expenditure reduction, in the granting of foreign aid given the presence of asymmetric information. The authors present two conceptually separate principal-agent models to capture the stylized facts of multilateral and bilateral aid negotiations respectively. The first model is an application of the problem of adverse selection when there is more than one type of principal (donor) with varying objectives. The second model extends moral hazard to double moral hazard, where neither principal nor agent (recipient) can fully observe or verify each other's strategies. Copyright 1995 by Royal Economic Society.

S. Mansoob Murshed

Papers

Spatial-Horizontal Inequality and the Maoist Insurgency in Nepal

Conflict, Civil War and Underdevelopment: An Introduction

Conflict in Africa : The Cost of Peaceful Behaviour

When Does Natural Resource Abundance Lead to a Resource Curse

Aid Conditionality and Military Expenditure Reduction in Developing Countries: Models of Asymmetric Information