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Good for the money

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Author Info

  • Matthew R DiGiuseppe

    ()
    (Department of Political Science, Binghamton University)

  • Colin M Barry

    (Department of Political Science, Binghamton University)

  • Richard W Frank

    (Department of Political Science, University of New Orleans)

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    Abstract

    Previous research indicates that a lack of state capacity is a key determinant of internal armed conflict. Scholars identify several internal dimensions of state capacity, but have yet to explore how international finance influences state resources. This is surprising because sovereign lending has increased dramatically in recent decades and plays an increasing role in the functioning of developed and developing governments. In this article, we explore this relationship between a state’s integration into global credit markets and its subsequent capacity to promote domestic stability. We argue that international capital increases a state’s ability to respond to internal opposition because states with favorable credit terms can expand their resource base beyond domestic constraints to deter, accommodate, or repress opposition while maintaining a level provision of resources to their political base. We examine the influence that both capital access and credit terms have on the risk of civil conflict in 141 countries from 1981 to 2007. Our empirical results indicate that states with affordable credit access are indeed less likely to experience civil conflict.

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    Bibliographic Info

    Article provided by Peace Research Institute Oslo in its journal Journal of Peace Research.

    Volume (Year): 49 (2012)
    Issue (Month): 3 (May)
    Pages: 391-405

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    Handle: RePEc:sae:joupea:v:49:y:2012:i:3:p:391-405

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    Web page: http://www.prio.no/

    Related research

    Keywords: civil conflict; credit markets; state capacity;

    References

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    1. Easterly, William, 2002. "How Did Heavily Indebted Poor Countries Become Heavily Indebted? Reviewing Two Decades of Debt Relief," World Development, Elsevier, vol. 30(10), pages 1677-1696, October.
    2. Meredith Reid Sarkees & Phil Schafer, 2000. "The Correlates of War Data On War: an Update To 1997," Conflict Management and Peace Science, Peace Science Society (International), vol. 18(1), pages 123-144, February.
    3. Marta Reynal-Querol, 2002. "Political systems, stability and civil wars," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 465-483.
    4. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-71, October.
    5. Alex Braithwaite, 2010. "Resisting infection: How state capacity conditions conflict contagion," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(3), pages 311-319, May.
    6. Richard Cantor & Frank Packer, 1996. "Determinants and impacts of sovereign credit ratings," Research Paper 9608, Federal Reserve Bank of New York.
    7. Schultz, Kenneth A. & Weingast, Barry R., 2003. "The Democratic Advantage: Institutional Foundations of Financial Power in International Competition," International Organization, Cambridge University Press, vol. 57(01), pages 3-42, December.
    8. Stephan Haggard, 2000. "Political Economy of the Asian Financial Crisis, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 107, July.
    9. David Sobek, 2010. "Masters of their domains: The role of state capacity in civil wars," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(3), pages 267-271, May.
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    11. Bordo, Michael D. & White, Eugene N., 1991. "A Tale of Two Currencies: British and French Finance During the Napoleonic Wars," The Journal of Economic History, Cambridge University Press, vol. 51(02), pages 303-316, June.
    12. Clague, Christopher, et al, 1999. " Contract-Intensive Money: Contract Enforcement, Property Rights, and Economic Performance," Journal of Economic Growth, Springer, vol. 4(2), pages 185-211, June.
    13. Wibbels, Erik, 2006. "Dependency Revisited: International Markets, Business Cycles, and Social Spending in the Developing World," International Organization, Cambridge University Press, vol. 60(02), pages 433-468, April.
    14. Micahael Tomz & Jason Wittenberg & Gary King, . "Clarify: Software for Interpreting and Presenting Statistical Results," Journal of Statistical Software, American Statistical Association, vol. 8(i01).
    15. Kristian Skrede Gleditsch & Andrea Ruggeri, 2010. "Political opportunity structures, democracy, and civil war," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(3), pages 299-310, May.
    16. Cameron G Thies, 2010. "Of rulers, rebels, and revenue: State capacity, civil war onset, and primary commodities," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(3), pages 321-332, May.
    17. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
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