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Are All Resources Cursed? Coffee, Oil and Armed Confict in Colombia

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  • Oeindrila Dube

    ()

  • Juan F. Vargas

    ()

Abstract

The “Resource Curse” posits a positive association between the value of natural commodities and civil conflict. In this paper, we suggest that the value-to-violence relationship differs across commodities, and that the factor intensity of production determines whether a rise in the price of a legally traded good will exacerbate conflict. We exploit exogenous price shocks for coffee and oil to test this hypothesis, using data on politically-motivated violence in Colombia over 1988 to 2004. We find that a drop in coffee prices during the 1990s led to a disproportionate rise in conflict in the coffee areas. Poverty dynamics follow a similar pattern, while substitution into drug crops do not, which suggests that it is the fall in income rather than the drug trade that fuelled this effect. In contrast, we find that oil prices are positively related to clashes with government forces, and that state revenue is used to strengthen military presence in oil areas. Our results suggest that the income channel is critical in determining how price shocks to labor-intensive commodities affect insurgency. However, for capital-intensive goods, the revenue effect predominates in mediating how the value of the commodity affects violence.

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Bibliographic Info

Paper provided by CERAC -CENTRO DE RECURSOS PARA EL ANÁLISIS DE CONFLICTOS- in its series DOCUMENTOS DE CERAC with number 002024.

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Length: 54
Date of creation: 13 Dec 2006
Date of revision:
Handle: RePEc:col:000150:002024

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  1. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  2. Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Institutions and the resource curse," Memorandum 29/2002, Oslo University, Department of Economics.
  3. Barron, Patrick & Kaiser, Kai & Pradhan, Menno, 2004. "Local conflict in Indonesia : Measuring incidence and identifying patterns," Policy Research Working Paper Series 3384, The World Bank.
  4. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  5. Jorge Restrepo, Michael Spagat and Juan Vargas, 2003. "The Dynamics of the Colombian Civil Conflict: A New Data Set," Royal Holloway, University of London: Discussion Papers in Economics 03/12, Department of Economics, Royal Holloway University of London, revised Dec 2003.
  6. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
  7. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
  8. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  9. Deininger, Klaus, 2003. "Causes and consequences of civil strife - micro-level evidence from Uganda," Policy Research Working Paper Series 3045, The World Bank.
  10. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  11. Do, Quy-Toan & Iyer, Lakshmi, 2007. "Poverty, social divisions, and conflict in Nepal," Policy Research Working Paper Series 4228, The World Bank.
  12. Daniele Giovannucci & José Leibovich & Diego Pizano & Banco Mundial, 2002. "Colombia Coffee Sector Study," DOCUMENTOS CEDE 002135, UNIVERSIDAD DE LOS ANDES-CEDE.
  13. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
  14. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
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Cited by:
  1. Olga Shemyakina, 2006. "The Effect of Armed Conflict on Accumulation of Schooling: Results from Tajikistan," HiCN Working Papers 12, Households in Conflict Network.
  2. Patricia Justino, 2012. "Shared Societies and Armed Conflict: Costs, Inequality and the Benefits of Peace," HiCN Working Papers 125, Households in Conflict Network.
  3. Ahmed Saber Mahmud & Juan F. Vargas, 2008. "Combatant recruitment and the outcome of war," DOCUMENTOS DE TRABAJO 005029, UNIVERSIDAD DEL ROSARIO.
  4. Poelhekke, Steven & van der Ploeg, Frederick, 2010. "Do Natural Resources Attract FDI? Evidence from Non-Stationary Sector-Level Data," CEPR Discussion Papers 8079, C.E.P.R. Discussion Papers.

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