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Predation, Taxation, Investment, and Violence: Evidence from the Philippines

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  • Berman, Eli
  • Felter, Joseph
  • Kapstein, Ethan
  • Troland, Erin

Abstract

The literature relating economic activity to political violence has greedy rebels (Collier; 2000) but not greedy governments. Yet capturing tax revenue might motivate governments to control territory; just as capturing extortion revenues motivates rebels. Panel data on political violence in the Philippines distinguish government from rebel attacks; which we link to private investment across 70 provinces. To formally explore these data we expand an established theory of asymmetric substate conflict –the “information-centric” model; by adding firms; investment; taxation and predation (i.e.; extortionary violence by rebels in response to investment) to the interplay of government; rebels and civilians; generating testable implications. Necessary conditions for predation are sufficient to imply “tax capture” (i.e.; violence by government in response to investment.) In the context of the expanded model; these results are consistent with tax capture and predation; and weigh against a dominant role for other mechanisms linking investment and violence; such as opportunity costs or a grievance-based mechanism. The data show that increases in investment predict increases in government attacks; as well as increases in rebel attacks. The “tax capture” response reverses in the following year.

Suggested Citation

  • Berman, Eli & Felter, Joseph & Kapstein, Ethan & Troland, Erin, 2014. "Predation, Taxation, Investment, and Violence: Evidence from the Philippines," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197197, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iats14:197197
    DOI: 10.22004/ag.econ.197197
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    Cited by:

    1. Pena, Paola & Urrego, Joaquin & Villa, Juan M., 2017. "Civil Conflict and Conditional Cash Transfers: Effects on Demobilization," World Development, Elsevier, vol. 99(C), pages 431-440.
    2. Cortés Darwin & Montolio Daniel, 2014. "Provision of Public Goods and Violent Conflict: Evidence from Colombia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(1), pages 143-167, January.
    3. Galdo Virgilio & Acevedo Gladys Lopez & Rama Martin, 2021. "Conflict and the composition of economic activity in Afghanistan," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-23, January.
    4. Eli Berman & Mitch Downey & Joseph Felter, 2016. "Expanding Governance as Development: Evidence on Child Nutrition in the Philippines," NBER Working Papers 21849, National Bureau of Economic Research, Inc.
    5. Michael A. Rubin, 2020. "Rebel Territorial Control and Civilian Collective Action in Civil War: Evidence from the Communist Insurgency in the Philippines," Journal of Conflict Resolution, Peace Science Society (International), vol. 64(2-3), pages 459-489, February.
    6. Uzoma Iloanugo & Indranil Dutta & M. Emranul Haque, 2020. "Do Amnesty Policies Reduce Conflict? Evidence from the Niger-Delta Amnesty Program," Economics Discussion Paper Series 2011, Economics, The University of Manchester.
    7. Janet Rubin & Rodrigo Wagner, 2015. "Destroying collateral: asset security and the financing of firms," Applied Economics Letters, Taylor & Francis Journals, vol. 22(9), pages 704-709, June.

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    More about this item

    Keywords

    International Development; International Relations/Trade; Public Economics;
    All these keywords.

    JEL classification:

    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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