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Resource curse in reverse: The coffee crisis and armed conflict in Colombia

  • OEINDRILA DUBE

    ()

  • JUAN FERNANDO VARGAS

    ()

Between 1998 and 2003 production increases in Brazil and Vietnam drove down the price of coffee by 73 percent in global markets, triggering the international coffee crisis". We examine the effect of this exogenous price shock on Colombia´s civil war, exploring whether politically-motivated violence presented different dynamics in the coffee -growing regions relative to the non- coffee regions, during the pre-crisis and crisis periods. Using a difference-in-differences framework, we find causal evidence that the steep decline in coffee prices substantially increased both the incidence and intensity of Colombia´s civil war. We also propose a simple model linking the price shock to violence and empirically examine the relative importance of three potential mechanisms. While crop substitution from coffee to coca explains very little of the variation, a disproportionate increase in poverty in coffee areas is associated with greater violence, as is a lower state capacity."

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File URL: http://economia.uniandes.edu.co/publicaciones/d2006-46.pdf
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Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 003460.

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Length: 53
Date of creation: 10 Dec 2006
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Handle: RePEc:col:000089:003460
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  1. Robinson, James A & Torvik, Ragnar & Verdier, Thierry, 2002. "Political Foundations of the Resource Curse," CEPR Discussion Papers 3422, C.E.P.R. Discussion Papers.
  2. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
  3. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
  4. Barron, Patrick & Kaiser, Kai & Pradhan, Menno, 2004. "Local conflict in Indonesia : Measuring incidence and identifying patterns," Policy Research Working Paper Series 3384, The World Bank.
  5. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  6. Joshua D. Angrist & Adriana D. Kugler, 2008. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 191-215, May.
  7. Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Institutions and the resource curse," Memorandum 29/2002, Oslo University, Department of Economics.
  8. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  9. 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.
  10. Daniele Giovannucci & José Leibovich & Diego Pizano & Banco Mundial, 2002. "Colombia Coffee Sector Study," DOCUMENTOS CEDE 002135, UNIVERSIDAD DE LOS ANDES-CEDE.
  11. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  12. Do, Quy-Toan & Iyer, Lakshmi, 2007. "Poverty, social divisions, and conflict in Nepal," Policy Research Working Paper Series 4228, The World Bank.
  13. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
  14. Deininger, Klaus, 2003. "Causes and consequences of civil strife - micro-level evidence from Uganda," Policy Research Working Paper Series 3045, The World Bank.
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