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Giant Oil Discoveries and Conflicts

Author

Listed:
  • Carolyn Chisadza

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

  • Matthew Clance

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Pretoria, South Africa)

  • Mark E. Wohar

    (College of Business Administration, University of Nebraska; USA. School of Business and Economics, Loughborough University, Leicestershire, LE11 3TU, UK)

Abstract

This study investigates the impact of oil discoveries on conflict. We argue that rents from resources are only part of the resource curse story, with discoveries of natural resources being just as prominent. Using a new measure for oil discoveries for a global panel of countries between 1960 and 2012, we find a positive correlation between oil discoveries and conflict, controlling for regional effects and other conflict determinants. Further analysis by type of conflict reveals that the discovery of oil deposits increases intrastate conflict in relation to interstate conflict, more so ethnic violence within countries. These effects are evident within a year of discovering the oil, and are persistent for over ten years after the discovery. The results also indicate that North Africa and Middle East countries are the most affected by oil discoveries in relation to other global regions. We find similar positive effects on conflict with quantity of oil discovered, as well as the expectation of oil discoveries. Interestingly, while institutions have a significant non-linear effect on conflict, they appear to have no significant mitigating effect when interacted with oil discoveries. The implication of this result may allude to countries with natural resources needing more transparent institutions to alleviate the resource curse. Overall, we believe the results from this study will provide some further understanding to the complex nature involving natural resources and incidences of conflict.

Suggested Citation

  • Carolyn Chisadza & Matthew Clance & Rangan Gupta & Mark E. Wohar, 2019. "Giant Oil Discoveries and Conflicts," Working Papers 201964, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201964
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    panel data; conflict; natural resources;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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