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Rural Windfall or a New Resource Curse? Coca, Income and Civil Conflict in Colombia

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Author Info
Angrist, Joshua
Kugler, Adriana D.

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Abstract

Natural and agricultural resources for which there is a substantial black market, such as coca, opium, and diamonds, appear especially likely to be exploited by the parties to a civil conflict. On the other hand, these resources may also provide one of the few reliable sources of income in the countryside. In this paper, we study the economic and social consequences of a major shift in the production of coca paste from Peru and Bolivia to Colombia, where most coca leaf is now harvested. This shift, which arose in response to the disruption of the 'air bridge' that previously ferried coca paste into Colombia, provided an exogenous boost in the demand for Colombian coca leaf. Our analysis shows this shift generated economic gains in rural areas, primarily in the form of increased self-employment earnings and increased labour supply by teenage boys. There is little evidence of widespread economic spillovers, however. The results also suggest that the rural areas which saw accelerated coca production subsequently became much more violent. Taken together, these findings support the view that the Colombian civil conflict is fuelled by the financial opportunities that coca provides. This is in line with a recent literature that attributes the extension of civil conflicts to economic rewards and an environment that favours insurgency more than to the persistence of economic or political grievances.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5324.

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Date of creation: Oct 2005
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Handle: RePEc:cpr:ceprdp:5324

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Keywords: civil war resource curse rural development

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Find related papers by JEL classification:
J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses
O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
P48 - Economic Systems - - Other Economic Systems - - - Other Economic Systems: Political Economy; Legal Institutions; Property Rights

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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.:
  1. Angrist, Joshua & Kugler, Adriana D., 2005. "Rural Windfall or a New Resource Curse? Coca, Income and Civil Conflict in Colombia," CEPR Discussion Papers 5324, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Kugler, Adriana D., 2005. "Wage-shifting effects of severance payments savings accounts in Colombia," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 487-500, February. [Downloadable!] (restricted)
  3. Alberto Abadie, 2004. "Poverty, Political Freedom, and the Roots of Terrorism," NBER Working Papers 10859, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Massimo Guidolin & Eliana La Ferrara, 2006. "Diamonds are forever, wars are not. Is conflict bad for private firms?," Working Papers 2005-004, Federal Reserve Bank of St. Louis. [Downloadable!]
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  5. Kugler, Adriana & Kugler, Maurice, 2003. "The Labor Market Effects of Payroll Taxes in a Middle-Income Country: Evidence from Colombia," IZA Discussion Papers 852, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse: An Illustration from Nigeria," IMF Working Papers 03/139, International Monetary Fund. [Downloadable!]
    Other versions:
  7. Alan B. Krueger & Jitka Maleckova, 2002. "Education, Poverty, Political Violence and Terrorism: Is There a Causal Connection?," NBER Working Papers 9074, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Carrington, William J, 1996. "The Alaskan Labor Market during the Pipeline Era," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 186-218, February. [Downloadable!] (restricted)
  9. Edward Miguel, Shanker Satyanath, and 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.
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  11. Dan Black & Terra McKinnish & Seth Sanders, 2005. "The Economic Impact Of The Coal Boom And Bust," Economic Journal, Royal Economic Society, vol. 115(503), pages 449-476, 04. [Downloadable!] (restricted)
  12. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2004. "The Effect of Structural Reforms on Productivity and Profitability Enhancing Reallocation: Evidence from Colombia," NBER Working Papers 10367, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Steiner, Roberto, 1998. "Colombia's income from the drug trade," World Development, Elsevier, vol. 26(6), pages 1013-1031, June. [Downloadable!] (restricted)
  14. Collier, Paul & Hoeffler, Anke & Soderbom, Mans, 2001. "On the duration of civil war," Policy Research Working Paper Series 2681, The World Bank. [Downloadable!]
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  16. Herschel I. Grossman & Daniel Mejia, 2005. "The War Against Drug Producers," NBER Working Papers 11141, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Ricardo Hausmann & Roberto Rigobon, 2003. "An Alternative Interpretation of the 'Resource Curse': Theory and Policy Implications," NBER Working Papers 9424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Gaviria, Alejandro, 2000. "Increasing returns and the evolution of violent crime: the case of Colombia," Journal of Development Economics, Elsevier, vol. 61(1), pages 1-25, February. [Downloadable!] (restricted)
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  20. 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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  21. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Joshua D. Angrist & Adriana D. Kugler, 2007. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," IZA Discussion Papers 2790, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Oeindrila Dube & Juan F. Vargas, 2006. "Resource Curse in Reverse: The Coffee Crisis and Armed Conflict in Colombia," Royal Holloway, University of London: Discussion Papers in Economics 06/05, Department of Economics, Royal Holloway University of London, revised Dec 2006. [Downloadable!]
    Other versions:
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