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Are All Resources Cursed? Coffee, Oil and Armed Confict in Colombia

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  • Oeindrila Dube

    ()

  • Juan F. Vargas

    ()

Abstract

The Resource Curse" posits a positive association between the value of natural commodities and civil conflict. In this paper, we suggest that the value-to-violence relationship differs across commodities, and that the factor intensity of production determines whether a rise in the price of a legally traded good will exacerbate conflict. We exploit exogenous price shocks for coffee and oil to test this hypothesis, using data on politically-motivated violence in Colombia over 1988 to 2004. We find that a drop in coffee prices during the 1990s led to a disproportionate rise in conflict in the coffee areas. Poverty dynamics follow a similar pattern, while substitution into drug crops do not, which suggests that it is the fall in income rather than the drug trade that fuelled this effect. In contrast, we find that oil prices are positively related to clashes with government forces, and that state revenue is used to strengthen military presence in oil areas. Our results suggest that the income channel is critical in determining how price shocks to labor-intensive commodities affect insurgency. However, for capital-intensive goods, the revenue effect predominates in mediating how the value of the commodity affects violence."

Suggested Citation

  • Oeindrila Dube & Juan F. Vargas, 2006. "Are All Resources Cursed? Coffee, Oil and Armed Confict in Colombia," DOCUMENTOS DE CERAC 002024, CERAC -CENTRO DE RECURSOS PARA EL ANÁLISIS DE CONFLICTOS-.
  • Handle: RePEc:col:000150:002024
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    References listed on IDEAS

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    1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
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    Citations

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    Cited by:

    1. Shemyakina, Olga, 2011. "The effect of armed conflict on accumulation of schooling: Results from Tajikistan," Journal of Development Economics, Elsevier, vol. 95(2), pages 186-200, July.
    2. James Cust & Ridwan D. Rusli, 2014. "The economic spillovers from resource extraction: a partial resource blessing at the subnational level," CREA Discussion Paper Series 14-08, Center for Research in Economic Analysis, University of Luxembourg.
    3. Ernesto Dal Bó & Pablo Hernández & Sebastián Mazzuca, 2015. "The Paradox of Civilization: Pre-Institutional Sources of Security and Prosperity," NBER Working Papers 21829, National Bureau of Economic Research, Inc.
    4. Ahmed Mahmud & Juan Vargas, 2011. "Combatant recruitment and the outcome of war," Economics of Governance, Springer, vol. 12(1), pages 51-74, March.
    5. James CUST & Ridwan D. RUSLI, 2014. "The economic spillovers from resource extraction: a partial resource blessing at the subnational level?," Economic Growth Centre Working Paper Series 1402, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    6. Patricia Justino, 2012. "Shared Societies and Armed Conflict: Costs, Inequality and the Benefits of Peace," Working Papers 2012/35, Maastricht School of Management.
    7. Steven Poelhekke & Frederick van der Ploeg, 2010. "Do Natural Resources Attract FDI? Evidence from non-stationary sector level data," DNB Working Papers 266, Netherlands Central Bank, Research Department.
    8. Hvid, Anna Kirstine & Henningsen, Geraldine Adrienne, 2014. "A new scramble for land or an unprecedented opportunity for the rural poor? Distributional consequences of increasing land rents in developing countries," MPRA Paper 52919, University Library of Munich, Germany.

    More about this item

    Keywords

    Colombia; Civil War; 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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