Conflict and development

We examine a dynamic two-stage incumbent-challenger model of internal conflict, where the government, i.e. the incumbent, is in power, while the rebel challenges the government in a bid to capture state power. The central issue is the trade-off between development and security-based measures in countering such rebellion activity. We find that while an exogenous increase in development decreases the level of rebellion activity, it increases the level of security based measures by the government. Further, if the rebel is `dominant' to begin with, then, with the rebel becoming stronger, the level of rebel activity increases, while the security based measures by the government is lowered. Finally, if the rebel becomes stronger (i.e. becomes more cost efficient), then the government might find it optimal to decrease the level of development. Thus our analysis suggests that the trade-off is a nuanced one.