World Agricultural Prices and the Onset of Civil War

I show that falling world agricultural prices increased the likelihood of civil war onset during 1957–2007, especially in Sub-Saharan Africa. A one-standard-deviation price decline raised the likelihood of onset by around 30 percent in the global sample of 118 countries and by around 45 percent in Sub-Saharan Africa, relative to average onset rates of around 2 percent per year. I reconcile these findings with earlier mixed results by showing that the estimated effect depends on how country-specific price indices are constructed. Price indices that isolate changes in world commodity prices yield statistically significant effects, whereas indices conflating price changes with changes in countries’ exports do not. The effect of world prices on civil war onset operated through agricultural producers rather than food consumers. Estimates are essentially unchanged when I control for consumer food-price shocks, and effects are substantially larger among countries whose agricultural exports consist mainly of cash crops. This points to an opportunity-cost channel whereby falling prices depress producer incomes and lower the opportunity cost of joining armed conflict. Export data for low- and middle-income countries are often measured with error. I develop an analysis of measurement error in year-by-year export shares and show that period-average export shares permit consistent estimation.