IDEAS home Printed from https://ideas.repec.org/p/awi/wpaper/0652.html
   My bibliography  Save this paper

Stimulant or depressant? Resource-related income shocks and conflict

Author

Listed:
  • Gehring, Kai
  • Langlotz, Sarah
  • Kienberger, Stefan

Abstract

We provide new evidence about the mechanisms linking resource-related income shocks to conflict. To do so, we combine temporal variation in international drug prices with new data on spatial variation in opium suitability to examine the effect of opium profitability on conflict in Afghanistan. District level results indicate a conflict-reducing effect over the 2002-2014 period, both in a reduced-form setting and with three different instrumental variables. We provide evidence for two main mechanisms. First, the importance of contest effects depends on the degree of violent group competition over valuable resources. By using data on the drug production process, ethnic homelands, and Taliban versus pro-government influence, we show that on average group competition for suitable districts is relatively low in Afghanistan. Second, we highlight the role of opportunity costs by showing that opium profitability positively affects household living standards, and becomes more important after a sudden rise in unemployment due to the dissolution of large armed militias after an exogenous policy change.

Suggested Citation

  • Gehring, Kai & Langlotz, Sarah & Kienberger, Stefan, 2018. "Stimulant or depressant? Resource-related income shocks and conflict," Working Papers 0652, University of Heidelberg, Department of Economics.
  • Handle: RePEc:awi:wpaper:0652
    Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
    as

    Download full text from publisher

    File URL: http://nbn-resolving.de/urn/resolver.pl?urn=urn:nbn:de:bsz:16-heidok-251243
    File Function: Frontdoor page on HeiDOK
    Download Restriction: no

    File URL: http://archiv.ub.uni-heidelberg.de/volltextserver/25124/1/Gehring%2C%20Langlotz%2C%20and%20Kienberger_2018_dp0652.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nathan Nunn & Diego Puga, 2012. "Ruggedness: The Blessing of Bad Geography in Africa," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 20-36, February.
    2. Sexton, Renard, 2016. "Aid as a Tool against Insurgency: Evidence from Contested and Controlled Territory in Afghanistan," American Political Science Review, Cambridge University Press, vol. 110(4), pages 731-749, November.
    3. Elias Papaioannou, 2014. "National Institutions and Subnational Development in Africa," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 151-213.
    4. Francesco Trebbi & Eric Weese, 2019. "Insurgency and Small Wars: Estimation of Unobserved Coalition Structures," Econometrica, Econometric Society, vol. 87(2), pages 463-496, March.
    5. Joan Esteban & Debraj Ray, 2008. "Polarization, Fractionalization and Conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 45(2), pages 163-182, March.
    6. Daron Acemoglu & Davide Cantoni & Simon Johnson & James A. Robinson, 2011. "The Consequences of Radical Reform: The French Revolution," American Economic Review, American Economic Association, vol. 101(7), pages 3286-3307, December.
    7. Stelios Michalopoulos & Elias Papaioannou, 2016. "The Long-Run Effects of the Scramble for Africa," American Economic Review, American Economic Association, vol. 106(7), pages 1802-1848, July.
    8. Daniel Mejía & Pascual Restrepo & Sandra V. Rozo, 2017. "On the Effects of Enforcement on Illegal Markets: Evidence from a Quasi-Experiment in Colombia," World Bank Economic Review, World Bank Group, vol. 31(2), pages 570-594.
    9. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    10. Eleonora Nillesen & Philip Verwimp, 2009. "Grievance, Commodity Prices and Rainfall: A Village-level Analysis of Rebel Recruitment in Burundi," HiCN Working Papers 58, Households in Conflict Network.
    11. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 799-858.
    12. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    13. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
    14. van der Ploeg, Frederick & Rohner, Dominic, 2012. "War and natural resource exploitation," European Economic Review, Elsevier, vol. 56(8), pages 1714-1729.
    15. Richard Bluhm & Martin Gassebner & Sarah Langlotz & Paul Schaudt, 2021. "Fueling conflict? (De)escalation and bilateral aid," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 244-261, March.
    16. Nils B. Weidmann, 2015. "On the Accuracy of Media-based Conflict Event Data," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(6), pages 1129-1149, September.
    17. Vincenzo Bove & Leandro Elia, 2013. "Drugs and Violence in Afghanistan: A Panel Var With Unobserved Common Factor Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(6), pages 535-554, December.
    18. Paul Collier & Anke Hoeffler, 2004. "Greed and grievance in civil war," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 563-595, October.
    19. Melissa Dell, 2015. "Trafficking Networks and the Mexican Drug War," American Economic Review, American Economic Association, vol. 105(6), pages 1738-1779, June.
    20. Morelli, Massimo & Rohner, Dominic, 2015. "Resource concentration and civil wars," Journal of Development Economics, Elsevier, vol. 117(C), pages 32-47.
    21. Matthew D. Webb, 2014. "Reworking Wild Bootstrap Based Inference For Clustered Errors," Working Paper 1315, Economics Department, Queen's University.
    22. Christian,Paul J. & Barrett,Christopher B., 2017. "Revisiting the effect of food aid on conflict : a methodological caution," Policy Research Working Paper Series 8171, The World Bank.
    23. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    24. Paivi Lujala, 2009. "Deadly Combat over Natural Resources," Journal of Conflict Resolution, Peace Science Society (International), vol. 53(1), pages 50-71, February.
    25. Ralph Sundberg & Erik Melander, 2013. "Introducing the UCDP Georeferenced Event Dataset," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(4), pages 523-532, July.
    26. Mariaflavia Harari & Eliana La Ferrara, 2012. "Conflict, Climate and Cells: A disaggregated analysis," Working Papers 461, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    27. Besley, Timothy & Reynal-Querol, Marta, 2014. "The Legacy of Historical Conflict: Evidence from Africa," American Political Science Review, Cambridge University Press, vol. 108(2), pages 319-336, May.
    28. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    29. Ross, Michael L., 2004. "How Do Natural Resources Influence Civil War? Evidence from Thirteen Cases," International Organization, Cambridge University Press, vol. 58(1), pages 35-67, February.
    30. repec:kob:wpaper:1628 is not listed on IDEAS
    31. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
    32. Samuel Bazzi & Christopher Blattman, 2014. "Economic Shocks and Conflict: Evidence from Commodity Prices," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 1-38, October.
    33. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
    34. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    35. Nils B. Weidmann & Jan Ketil Roslashd & Lars-Erik Cederman, 2010. "Representing ethnic groups in space: A new dataset," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(4), pages 491-499, July.
    36. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    37. 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.
    38. Daron Acemoglu & Alexander Wolitzky, 2014. "Cycles of Conflict: An Economic Model," American Economic Review, American Economic Association, vol. 104(4), pages 1350-1367, April.
    39. Wiesmann, Doris & Bassett, Lucy & Benson, Todd & Hoddinott, John, 2009. "Validation of the world food programme's food consumption score and alternative indicators of household food security:," IFPRI discussion papers 870, International Food Policy Research Institute (IFPRI).
    40. Lyall, Jason & Blair, Graeme & Imai, Kosuke, 2013. "Explaining Support for Combatants during Wartime: A Survey Experiment in Afghanistan," American Political Science Review, Cambridge University Press, vol. 107(4), pages 679-705, November.
    41. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-921, September.
    42. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Public Choice, Springer, vol. 63(2), pages 101-112, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arinze Nwokolo, 2018. "Oil Price Shocks and Civil Conflict: Evidence from Nigeria," HiCN Working Papers 274, Households in Conflict Network.
    2. Nemera Gebeyehu Mamo, 2018. "Essays on natural resources in Africa: local economic development, multi-ethnic coalitions and armed conflict," Economics PhD Theses 0518, Department of Economics, University of Sussex Business School.
    3. Thiemo Fetzer & Samuel Marden, 2017. "Take What You Can: Property Rights, Contestability and Conflict," Economic Journal, Royal Economic Society, vol. 0(601), pages 757-783, May.
    4. Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2020. "Diversity and Conflict," Econometrica, Econometric Society, vol. 88(2), pages 727-797, March.
    5. 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.
    6. Paolo Verme & Kirsten Schuettler, 2019. "The Impact of Forced Displacement on Host Communities: A Review of the Empirical Literature in Economics," HiCN Working Papers 302, Households in Conflict Network.
    7. Thiemo Fetzer & Samuel Marden, 2016. "Take what you can: property rights, contestability and conflict," Working Paper Series 9216, Department of Economics, University of Sussex.
    8. Camille Laville, 2018. "The econometrical causal analysis of internal conflicts: The evolutions of a growing literature [L’analyse économétrique des conflits internes par l’approche causale : les évolutions d’une littérat," Working Papers hal-01940461, HAL.
    9. Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2020. "Diversity and Conflict," Econometrica, Econometric Society, vol. 88(2), pages 727-797, March.
    10. Ang, James B. & Gupta, Satyendra Kumar, 2018. "Agricultural yield and conflict," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 397-417.
    11. Martínez, Luis R., 2017. "Transnational insurgents: Evidence from Colombia's FARC at the border with Chávez's Venezuela," Journal of Development Economics, Elsevier, vol. 126(C), pages 138-153.
    12. Cervellati, Matteo & Esposito, Elena & Sunde, Uwe & Valmori, Simona, 2016. "Malaria Risk and Civil Violence," CEPR Discussion Papers 11496, C.E.P.R. Discussion Papers.
    13. Achyuta Adhvaryu & James Fenske & Gaurav Khanna & Anant Nyshadham, 2018. "Resources, Conflict, and Economic Development in Africa," HiCN Working Papers 272, Households in Conflict Network.
    14. Mahdi FAWAZ, 2020. "Ressources naturelles et guerres civiles au Moyen-Orient," Bordeaux Economics Working Papers 2020-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    15. Achim Ahrens, 2015. "Civil conflicts in Africa: Climate, economic shocks, nighttime lights and spill-over effects," SEEC Discussion Papers 1501, Spatial Economics and Econometrics Centre, Heriot Watt University.
    16. Edgar H. Sanchez-Cuevas, 2018. "Fighting Fire with Aid: Development Assistance as Counterinsurency Tool. Evidence for Colombia," Documentos CEDE 016378, Universidad de los Andes - CEDE.
    17. Fenske, James & Kala, Namrata, 2017. "1807: Economic shocks, conflict and the slave trade," Journal of Development Economics, Elsevier, vol. 126(C), pages 66-76.
    18. Adhvaryu, Achyuta & Fenske, James & Khanna, Gaurav & Nyshadham, Anant, 2021. "Resources, conflict, and economic development in Africa," Journal of Development Economics, Elsevier, vol. 149(C).
    19. Alex Dickson & Ian A MacKenzie & Petros G Sekeris, 2018. "The role of markets and preferences on resource conflicts," Working Papers 1819, University of Strathclyde Business School, Department of Economics.
    20. Andrea Guariso & Thorsten Rogall, 2017. "Rainfall Inequality, Political Power, and Ethnic Conflict in Africa," LICOS Discussion Papers 39117, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:awi:wpaper:0652. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gabi Rauscher) The email address of this maintainer does not seem to be valid anymore. Please ask Gabi Rauscher to update the entry or send us the correct email address. General contact details of provider: https://edirc.repec.org/data/awheide.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.