Between 1998 and 2003 production increases in Brazil and Vietnam drove down the price of coffee by 73 percent in global markets, triggering the “international coffee crisis”. We examine the effect of this exogenous price shock on Colombia’s civil war, exploring whether politically-motivated violence presented different dynamics in the coffee –growing regions relative to the non- coffee regions, during the pre-crisis and crisis periods. Using a difference-in-differences framework, we find causal evidence that the steep decline in coffee prices substantially increased both the incidence and intensity of Colombia’s civil war. We also propose a simple model linking the price shock to violence and empirically examine the relative importance of three potential mechanisms. While crop substitution from coffee to coca explains very little of the variation, a disproportionate increase in poverty in coffee areas is associated with greater violence, as is a lower state capacity.
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Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number
003460.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Daniele Giovannucci & José Leibovich & Diego Pizano & Banco Mundial, 2002.
"Colombia Coffee Sector Study,"
DOCUMENTOS CEDE
002135, UNIVERSIDAD DE LOS ANDES-CEDE.
[Downloadable!]
Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006.
"Institutions and the Resource Curse,"
Economic Journal,
Royal Economic Society, vol. 116(508), pages 1-20, 01.
[Downloadable!] (restricted)
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