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Journal ArticleDOI

Commodity Price Shocks and Civil Conflict: Evidence from Colombia

01 Oct 2013-The Review of Economic Studies (Oxford University Press)-Vol. 80, Iss: 4, pp 1384-1421
TL;DR: In this article, the authors exploit exogenous price shocks in inter-national commodity markets and a rich dataset on civil war in Colombia to assess how dierent income shocks aect armed conflict.
Abstract: How do income shocks aect armed con‡ict? Theory suggests two op- posite eects. If labor is used to appropriate resources violently, higher wages may lower con‡ict by reducing labor supplied to appropriation. This is the opportunity cost eect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity eect. Our paper exploits exogenous price shocks in inter- national commodity markets and a rich dataset on civil war in Colombia to assess how dierent income shocks aect con‡ict. We examine changes in the price of agricultural goods (which are labor intensive) and natural resources (which are capital intensive). We focus on coee and oil, the two largest exports. We …nd that a sharp fall in coee prices in the 1990s increased violence dierentially in regions growing more coee, by lower- ing wages and the opportunity cost of joining armed groups. In contrast, a rise in oil prices increased violence dierentially in the oil region, by in- creasing municipal revenue siphoned through rapacity. This pattern holds in several other agricultural and natural resource sectors, providing robust evidence that price shocks aect con‡ict in opposite directions depending on the factor intensity of the commodity.

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TL;DR: This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources and offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.
Abstract: 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.

1,570 citations

Journal ArticleDOI
13 Sep 2013-Science
TL;DR: There is more agreement across studies regarding the influence of climate on human conflict than has been recognized previously and warmer temperatures or extremes of rainfall can be causally associated with changes in interpersonal violence and in civil war.
Abstract: A rapidly growing body of research examines whether human conflict can be affected by climatic changes. Drawing from archeology, criminology, economics, geography, history, political science, and psychology, we assemble and analyze the 60 most rigorous quantitative studies and document, for the first time, a remarkable convergence of results. We find strong causal evidence linking climatic events to human conflict across a range of spatial and temporal scales and across all major regions of the world. The magnitude of climate's influence is substantial: for each 1 standard deviation (1σ) change in climate toward warmer temperatures or more extreme rainfall, median estimates indicate that the frequency of interpersonal violence rises 4% and the frequency of intergroup conflict rises 14%. Because locations throughout the inhabited world are expected to warm 2-4σ by 2050, amplified rates of human conflict could represent a large and critical impact of anthropogenic climate change.

1,315 citations

Journal ArticleDOI
TL;DR: In this article, a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources are surveyed and some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.
Abstract: 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.

1,240 citations

Journal ArticleDOI
TL;DR: The authors studied the effect of US food aid on conflict in recipient countries and found that an increase in food aid increases the incidence and duration of civil conflicts, but has no robust effect on interstate conflicts or the onset of civil conflict.
Abstract: We study the effect of US food aid on conflict in recipient countries. Our analysis exploits time variation in food aid shipments due to changes in US wheat production and cross-sectional variation in a country’s tendency to receive any US food aid. According to our estimates, an increase in US food aid increases the incidence and duration of civil conflicts, but has no robust effect on interstate conflicts or the onset of civil conflicts. We also provide suggestive evidence that the effects are most pronounced in countries with a recent history of civil conflict. (JEL D74, F35, O17, O19, Q11, Q18) We are unable to determine whether our aid helps or hinders one or more parties to the conflict … it is clear that the losses—particularly looted assets—constitutes a serious barrier to the efficient and effective provision of assistance, and can contribute to the war economy. This raises a serious challenge for the humanitarian community: can humanitarians be accused of fueling or prolonging the conflict in these two countries? — Medecins Sans Frontieres, Amsterdam 1

723 citations

Posted Content
TL;DR: This paper developed and tested an economic theory of insurgency motivated by the informal literature and by recent military doctrine and found that improved service provision reduces insurgent violence, particularly for smaller projects and since the "surge" began in 2007.
Abstract: We develop and test an economic theory of insurgency motivated by the informal literature and by recent military doctrine. We model a three-way contest between violent rebels, a government seeking to minimize violence by mixing service provision and coercion, and civilians deciding whether to share information about insurgents. We test the model using panel data from Iraq on violence against Coalition and Iraqi forces, reconstruction spending, and community characteristics (sectarian status, socio-economic grievances, and natural resource endowments). Our results support the theory's predictions: improved service provision reduces insurgent violence, particularly for smaller projects and since the "surge" began in 2007.

503 citations

References
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Journal ArticleDOI
TL;DR: In fact, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay as discussed by the authors, which is the basis for this essay. But, in spite of such diversity, some commonsense properties are not shared.
Abstract: Since the turn of the twentieth century, legislation in Western countries has expanded rapidly to reverse the brief dominance of laissez faire during the nineteenth century. The state no longer merely protects against violations of person and property through murder, rape, or burglary but also restricts ‘discrimination’ against certain minorities, collusive business arrangements, ‘jaywalking’, travel, the materials used in construction, and thousands of other activities. The activities restricted not only are numerous but also range widely, affecting persons in very different pursuits and of diverse social backgrounds, education levels, ages, races, etc. Moreover, the likelihood that an offender will be discovered and convicted and the nature and extent of punishments differ greatly from person to person and activity to activity. Yet, in spite of such diversity, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay.

9,613 citations

Journal ArticleDOI
TL;DR: This article showed that the current prevalence of internal war is mainly the result of a steady accumulation of protracted conflicts since the 1950s and 1960s rather than a sudden change associated with a new, post-Cold War international system.
Abstract: An influential conventional wisdom holds that civil wars proliferated rapidly with the end of the Cold War and that the root cause of many or most of these has been ethnic and religious antagonisms. We show that the current prevalence of internal war is mainly the result of a steady accumulation of protracted conflicts since the 1950s and 1960s rather than a sudden change associated with a new, post-Cold War international system. We also find that after controlling for per capita income, more ethnically or religiously diverse countries have been no more likely to experience significant civil violence in this period. We argue for understanding civil war in this period in terms of insurgency or rural guerrilla warfare, a particular form of military practice that can be harnessed to diverse political agendas. The factors that explain which countries have been at risk for civil war are not their ethnic or religious characteristics but rather the conditions that favor insurgency. These include poverty—which marks financially and bureaucratically weak states and also favors rebel recruitment—political instability, rough terrain, and large populations.We wish to thank the many people who provided comments on earlier versions of this paper in a series of seminar presentations. The authors also gratefully acknowledge the support of the National Science Foundation (Grants SES-9876477 and SES-9876530); support from the Center for Advanced Study in the Behavioral Sciences with funds from the William and Flora Hewlett Foundation; valuable research assistance from Ebru Erdem, Nikolay Marinov, Quinn Mecham, David Patel, and TQ Shang; sharing of data by Paul Collier.

5,994 citations

Posted Content
TL;DR: Collier and Hoeffler as discussed by the authors compare two contrasting motivations for rebellion: greed and grievance, and show that many rebellions are linked to the capture of resources (such as diamonds in Angola and Sierra Leone, drugs in Colombia, and timber in Cambodia).
Abstract: Of the 27 major armed conflicts that occurred in 1999, all but two took place within national boundaries. As an impediment to development, internal rebellion especially hurts the world's poorest countries. What motivates civil wars? Greed or grievance? Collier and Hoeffler compare two contrasting motivations for rebellion: greed and grievance. Most rebellions are ostensibly in pursuit of a cause, supported by a narrative of grievance. But since grievance assuagement through rebellion is a public good that a government will not supply, economists predict such rebellions would be rare. Empirically, many rebellions appear to be linked to the capture of resources (such as diamonds in Angola and Sierra Leone, drugs in Colombia, and timber in Cambodia). Collier and Hoeffler set up a simple rational choice model of greed-rebellion and contrast its predictions with those of a simple grievance model. Some countries return to conflict repeatedly. Are they conflict-prone or is there a feedback effect whereby conflict generates grievance, which in turn generates further conflict? The authors show why such a feedback effect might be present in both greed-motivated and grievance rebellions. The authors' results contrast with conventional beliefs about the causes of conflict. A stylized version of conventional beliefs would be that grievance begets conflict, which begets grievance, which begets further conflict. With such a model, the only point at which to intervene is to reduce the level of objective grievance. Collier and Hoeffler's model suggests that what actually happens is that opportunities for predation (controlling primary commodity exports) cause conflict and the grievances this generates induce dias-poras to finance further conflict. The point of policy intervention here is to reduce the absolute and relative attraction of primary commodity predation and to reduce the ability of diasporas to fund rebel movements. This paper - a product of the Development Research Group - is part of a larger effort in the group to study civil war and criminal violence. For more on this effort, go to www.worldbank.org/research/conflict. Paul Collier may be contacted at pcollier@worldbank.org.

5,349 citations

Journal ArticleDOI
TL;DR: In this paper, the gravity equation for trade was used to provide new estimates of this equation, and significant differences between the estimated estimator and those obtained with the traditional method were found.
Abstract: Although economists have long been aware of Jensen's inequality, many econometric applications have neglected an important implication of it: the standard practice of interpreting the parameters of log-linearized models estimated by ordinary least squares as elasticities can be highly misleading in the presence of heteroskedasticity. This paper explains why this problem arises and proposes an appropriate estimator. Our criticism to conventional practices and the solution we propose extends to a broad range of economic applications where the equation under study is log-linearized. We develop the argument using one particular illustration, the gravity equation for trade, and apply the proposed technique to provide new estimates of this equation. We find significant differences between estimates obtained with the proposed estimator and those obtained with the traditional method. These discrepancies persist even when the gravity equation takes into account multilateral resistance terms or fixed effects

4,492 citations


"Commodity Price Shocks and Civil Co..." refers background in this paper

  • ...33See also Santos Silva and Tenreyro (2010) for a related discussion on Poisson regressions, and Mullahy (1997), Windmeijer and Santos Silva (1997), and Santos Silva and Tenreyro (2006) for related estimation approaches....

    [...]

  • ...Since the dependent variables can be conceptualized as a count, in the Online Appendix, we also present a Poisson instrumental variables approach, which uses GLM estimation specifying that the errors are Poisson distributed and a log link, as well as an iterated re-weighted least squares convergence algorithm.32 This is an approach recommended by Santos Silva and Tenreyro (2011).33 In all specifications, we cluster the standard errors at the department level to control for potential serial correlation over time and across municipalities within a department....

    [...]

Journal ArticleDOI
TL;DR: The authors investigated the causes of civil war, using a new data set of wars during 1960-99 and found that economic viability appears to be the predominant systematic explanation of rebellion, while atypically severe grievances such as high inequality, a lack of political rights, or ethnic and religious divisions in society.
Abstract: This study investigates the causes of civil war, using a new data set of wars during 1960-99. Rebellion may be explained by atypically severe grievances, such as high inequality, a lack of political rights, or ethnic and religious divisions in society. Alternatively, it might be explained by atypical opportunities for building a rebel organization. Opportunity may be determined by access to finance, such as the scope for extortion of natural resources, and for donations from a Diaspora population. Opportunity may also depend upon factors such as geography: mountains and forests may be needed to incubate rebellion. These explanations are tested and find that opportunity provides considerably more explanatory power than grievance. Economic viability appears to be the predominant systematic explanation of rebellion. The results are robust to correction for outliers, alternative variable definition, and variations in estimation method

3,808 citations