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Resource Curse in Reverse: The Coffee Crisis and Armed Conflict in Colombia

Author

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  • Oeindrila Dube

    () (Kennedy School of Government, Harvard Uinversity)

  • Juan F. Vargas

    () (Department of Economics, Royal Holloway, University of London and IQSS, Harvard University.)

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 fall on Colombia's civil war, exploring whether politically-motivated violencee 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-difference framework, we find causal evidnece 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 index of institutional development.

Suggested Citation

  • Oeindrila Dube & Juan F. Vargas, 2006. "Resource Curse in Reverse: The Coffee Crisis and Armed Conflict in Colombia," Royal Holloway, University of London: Discussion Papers in Economics 06/05, Department of Economics, Royal Holloway University of London, revised Dec 2006.
  • Handle: RePEc:hol:holodi:0605
    as

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    References listed on IDEAS

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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. Hernando Zuleta & Juanita Villaveces, 2008. "Conflict and negotiation: a game theoretical approach," DOCUMENTOS DE TRABAJO 005148, UNIVERSIDAD DEL ROSARIO.
    3. Patricia Justino, 2012. "Shared Societies and Armed Conflict: Costs, Inequality and the Benefits of Peace," HiCN Working Papers 125, Households in Conflict Network.
    4. 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.
    5. Ahmed Mahmud & Juan Vargas, 2011. "Combatant recruitment and the outcome of war," Economics of Governance, Springer, vol. 12(1), pages 51-74, March.
    6. 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.
    7. 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.
    8. repec:eee:wdevel:v:98:y:2017:i:c:p:45-57 is not listed on IDEAS
    9. 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).
    10. 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.
    11. 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; Coffee Crisis; 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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