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Conflict Diamonds

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  • Olsson, Ola

    ()
    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

’Conflict diamonds’ 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 ’curse of natural resources’. 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 might increase the ruler’s public utility investments, it might also lead to a crowding-out in favor of defense spendings, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a ’U-shaped’ relationship with economic growth.

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File URL: http://hdl.handle.net/2077/2831
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 86.

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Length: 26 pages
Date of creation: 09 Jan 2003
Date of revision: 30 Nov 2003
Handle: RePEc:hhs:gunwpe:0086

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: diamonds; appropriative conflict; curse of natural resources; growth; predation;

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