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Predation, Taxation, Investment, and Violence: Evidence from the Philippines

Author

Listed:
  • Eli Berman
  • Joseph Felter
  • Ethan Kapstein
  • Erin Troland

Abstract

The literature relating economic activity to political violence posits greedy rebels (Collier, 2000) but not greedy governments. Could capturing tax revenue motivate governments to step up their counter insurgency operations, just as extortion motivates rebel violence? Panel data on political violence in the Philippines distinguish government from rebel attacks, which we link to private investment across 70 provinces. To formally explore these data we expand an established theory of asymmetric substate conflict –the “information-centric” model, adding firms, investment, taxation and predation (i.e., extortionary violence by rebels in response to investment) to the interplay of government, rebels and civilians, generating testable implications. The data show that increases in investment predict increases in both government-initiated attacks and rebel-initiated attacks. In the year following increased investment government attacks decrease. In the context of our expanded model, these empirical results suggest that both rebels and governments contest economic rents.

Suggested Citation

  • Eli Berman & Joseph Felter & Ethan Kapstein & Erin Troland, 2012. "Predation, Taxation, Investment, and Violence: Evidence from the Philippines," NBER Working Papers 18375, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18375
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    References listed on IDEAS

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    1. Eli Berman & Jacob N. Shapiro & Joseph H. Felter, 2011. "Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 766-819.
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    Cited by:

    1. Cortés Darwin & Montolio Daniel, 2014. "Provision of Public Goods and Violent Conflict: Evidence from Colombia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(1), pages 143-167, January.
    2. Eli Berman & Mitch Downey & Joseph Felter, 2016. "Expanding Governance as Development: Evidence on Child Nutrition in the Philippines," NBER Working Papers 21849, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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