AbstractâConflict diamondsâ refers to the fatal role that diamonds are believed to have played in several African conflicts. The article analyzes the impact of diamond abundance on economic growth in light of the broader, previously discovered empirical finding of a âcurse of natural resourcesâ. By extending the theory of appropriative conflict, a predator-prey game is outlined in which a rebel chooses between peaceful production and predation on natural resources controlled by the ruler. It is shown that whereas an increase in natural resources will increase the rulerâs public utility investments, it might also lead to a crowding-out of labor from the formal sector to the appropriative struggle, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a negative relationship with economic growth in countries with weak institutions.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 82 (2007)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
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