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Resource Curse in Reverse: The Coffee Crisis and Armed Conflict in Colombia

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Author Info
Oeindrila Dube () (Kennedy School of Government, Harvard Uinversity)
Juan F. Vargas () (Department of Economics, Royal Holloway, University of London and IQSS, Harvard University.)

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Abstract

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 fall on Colombia's civil war, exploring whether politically-motivated violencee 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-difference framework, we find causal evidnece 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 index of institutional development.

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Paper provided by Department of Economics, Royal Holloway University of London in its series Royal Holloway, University of London: Discussion Papers in Economics with number 06/05.

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Date of creation: Dec 2006
Date of revision: Dec 2006
Handle: RePEc:hol:holodi:0605

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Related research
Keywords: Colombia; Civil War; Coffee Crisis; Difference-in-Differences;

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Find related papers by JEL classification:
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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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. 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. [Downloadable!] (restricted)
    Other versions:
  2. 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. [Downloadable!]
  3. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  4. Joshua D. Angrist & Adriana Kugler, 2005. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," NBER Working Papers 11219, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. 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. [Downloadable!] (restricted)
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  6. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA. [Downloadable!]
    Other versions:
  7. 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)
  8. 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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  9. Deininger, Klaus, 2003. "Causes and consequences of civil strife - micro-level evidence from Uganda," Policy Research Working Paper Series 3045, The World Bank. [Downloadable!]
  10. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
  11. Jorge Restrepo & Michael Spagat & Juan Vargas, 2004. "The Dynamics of the Colombian Civil Conflict: A New Data Set," Royal Holloway, University of London: Discussion Papers in Economics 04/10, Department of Economics, Royal Holloway University of London, revised Jul 2004. [Downloadable!]
    Other versions:
  12. 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.
  13. Do, Quy-Toan & Iyer, Lakshmi, 2007. "Poverty, social divisions, and conflict in Nepal," Policy Research Working Paper Series 4228, The World Bank. [Downloadable!]
  14. Daniele Giovannucci & José Leibovich & Diego Pizano & Banco Mundial, 2002. "Colombia Coffee Sector Study," DOCUMENTOS CEDE 002135, UNIVERSIDAD DE LOS ANDES-CEDE. [Downloadable!]
  15. 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. [Downloadable!] (restricted)
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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. Hernando Zuleta & Juanita Villaveces, 2008. "Conflict and negotiation: a game theoretical approach," DOCUMENTOS DE TRABAJO 005148, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
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