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Stimulant or Depressant? Resource-Related Income Shocks and Conflict

Author

Listed:
  • Kai Gehring

    (University of Bern, Wyss Academy for Nature, CESifo)

  • Sarah Langlotz

    (University of Goettingen)

  • Stefan Kienberger

    (University of Salzburg)

Abstract

We provide evidence on the mechanisms linking resource-related income shocks to conflict, focusing on illegal crops. We hypothesize that the degree of group competition over resources and the extent of law enforcement explain whether opportunity cost or contest effects dominate. Combining temporal variation in international drug prices with spatial variation in the suitability to produce opium, we show that higher prices increase household living standards and reduce conflict in Afghanistan. Analyzing shifts in conflict tactics and using georeferenced data on drug production networks and territorial control highlight the importance of opportunity costs, and reveal heterogeneous effects consistent with our theory.

Suggested Citation

  • Kai Gehring & Sarah Langlotz & Stefan Kienberger, 2025. "Stimulant or Depressant? Resource-Related Income Shocks and Conflict," The Review of Economics and Statistics, MIT Press, vol. 107(6), pages 1518-1536, November.
    • Handle: RePEc:tpr:restat:v:107:y:2025:i:6:p:1518-1536
    DOI: 10.1162/rest_a_01375
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    2. Alfano, Marco & Goerlach, Joseph-Simon, 2023. "Instrumenting the effect of terrorism on education in Kenya," CEPR Discussion Papers 18559, Centre for Economic Policy Research.
    3. Daniele, Gianmarco & Le Moglie, Marco & Masera, Federico, 2023. "Pains, guns and moves: The effect of the U.S. opioid epidemic on Mexican migration," Journal of Development Economics, Elsevier, vol. 160(C).
    4. Stoop, Nik & Verpoorten, Marijke & van der Windt, Peter, 2019. "Artisanal or industrial conflict minerals? Evidence from Eastern Congo," World Development, Elsevier, vol. 122(C), pages 660-674.
    5. Hodler, Roland & Schaudt, Paul & Vesperoni, Alberto, 2023. "Mining for peace," CEPR Discussion Papers 17807, Centre for Economic Policy Research.
    6. Carolyn Chisadza & Matthew Clance & Rangan Gupta & Mark E. Wohar, 2024. "Giant oil discoveries and conflicts," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(6), pages 15681-15710, June.
    7. Gehring, Kai & Kaplan, Lennart C. & Wong, Melvin H.L., 2022. "China and the World Bank—How contrasting development approaches affect the stability of African states," Journal of Development Economics, Elsevier, vol. 158(C).

    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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