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

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  • OEINDRILA DUBE

    ()

  • JUAN FERNANDO VARGAS

    ()

Abstract

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."

Suggested Citation

  • Oeindrila Dube & Juan Fernando Vargas, 2006. "Resource curse in reverse: The coffee crisis and armed conflict in Colombia," DOCUMENTOS CEDE 003460, UNIVERSIDAD DE LOS ANDES-CEDE.
  • Handle: RePEc:col:000089:003460
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    References listed on IDEAS

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    Cited by:

    1. Hernando Zuleta & Juanita Villaveces, 2008. "Conflict and negotiation: a game theoretical approach," DOCUMENTOS DE TRABAJO 005148, UNIVERSIDAD DEL ROSARIO.
    2. Nathan Fiala & Stergios Skaperdas, 2011. "Economic Perspectives on Civil Wars," Chapters,in: The Handbook on the Political Economy of War, chapter 10 Edward Elgar Publishing.
    3. repec:eee:wdevel:v:98:y:2017:i:c:p:45-57 is not listed on IDEAS
    4. Rettberg, Angelika & Leiteritz, Ralf & Nasi, Carlo, 2010. "Entrepreneurial Activity and Civil War in Colombia: Exploring the Mutual Determinants between Armed Conflict and the Private Sector," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Colombia Conflict Coffee Crisis Resource Curse Difference in Differences;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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