Predation, Taxation, Investment and Violence: Evidence from the Philippines
This paper explores the relationship between investment and political violence through several possible mechanisms. Investment as a predictor of future violence implies that low private sector investment today provides a robust indicator of high violence tomorrow. "Rent-capture" or predation asserts that investment increases violence by motivating extortion by insurgents. A "hearts and minds" approach links investment to political violence in two possible ways: through an opportunity cost mechanism by which improved economic conditions raise the cost of rebel recruitment; and through a psychological "gratitude" effect which reduces cooperation of noncombatants with rebels. Finally, tax capture implies that government will increase coercive enforcement in an attempt to control areas where increased investment increases tax revenue. We lay out these mechanisms in a framework with strategic interaction between rebels, communities, government and firms within an information-centric or "hearts and minds" counterinsurgency model. We test these mechanisms in the context of the Philippines in the first decade of this century, using information on violent incidents initiated by both rebels and government and new data on industrial building permits, an indicator of economic investment. Increases in investment are positively correlated with both rebel and government initiated violence. In the context of our theory that constitutes unequivocal evidence of predation, is consistent with tax capture, and weighs against predictive investment, opportunity costs or gratitude being a dominant effect.
|Date of creation:||Aug 2013|
|Note:||DEV PE POL|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Eli Berman & Jacob N. Shapiro & Joseph H. Felter, 2008. "Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq," NBER Working Papers 14606, National Bureau of Economic Research, Inc.
- Svensson, Jakob, 1998. "Investment, property rights and political instability: Theory and evidence," European Economic Review, Elsevier, vol. 42(7), pages 1317-1341, July.
- Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
- Timothy Besley & Hannes Mueller, 2009. "Estimating the Peace Dividend:The Impact of Violence on HousePrices in Northern Ireland," STICERD - Economic Organisation and Public Policy Discussion Papers Series 011, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Tim Besley & Hannes Mueller, 2009. "Estimating the peace dividend: the impact of violence on house prices in Northern Ireland," IFS Working Papers W09/18, Institute for Fiscal Studies.
- Timothy Besley & Hannes Mueller, 2009. "Estimating the peace dividend: the impact of violence on house prices in Northern Ireland," LSE Research Online Documents on Economics 25427, London School of Economics and Political Science, LSE Library.
- Justin Yifu Lin, 2013. "New structural economics: the third wave of development thinking," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(2), pages 1-13, November.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
- Grossman, Herschel I, 1999. "Kleptocracy and Revolutions," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 267-283, April.
- Coyne, Christopher J. & Dempster, Gregory M. & Isaacs, Justin P., 2010. "Asset values and the sustainability of peace prospects," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(2), pages 146-156, May.
- Markus Brückner & Antonio Ciccone, 2011. "Rain and the Democratic Window of Opportunity," Econometrica, Econometric Society, vol. 79(3), pages 923-947, 05.
- Markus Brückner & Antonio Ciccone, 2008. "Rain and the democratic window of opportunity," Economics Working Papers 1114, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2009.
- Markus Brückner, 2010. "Rain and the Democratic Window of Opportunity," 2010 Meeting Papers 224, Society for Economic Dynamics.
- Markus Bruckner & Antonio Ciccone, 2010. "Rain and the Democratic Window of Opportunity," Working Papers 1010, BBVA Bank, Economic Research Department.
- Brückner, Markus & Ciccone, Antonio, 2008. "Rain and the Democratic Window of Opportunity," CEPR Discussion Papers 6691, C.E.P.R. Discussion Papers.
- Markus Brückner & Antonio Ciccone, 2009. "Rain and the Democratic Window of Opportunity," Working Papers 2009-38, FEDEA.
- Paul Collier, 2000. "Rebellion as a Quasi-Criminal Activity," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 839-853, December.
- Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
- Radha Iyengar & Jonathan Monten & Matthew Hanson, 2011. "Building Peace: The Impact of Aid on the Labor Market for Insurgents," NBER Working Papers 17297, National Bureau of Economic Research, Inc.
- Hirshleifer,Jack, 2001. "The Dark Side of the Force," Cambridge Books, Cambridge University Press, number 9780521804127.
- Hirshleifer,Jack, 2001. "The Dark Side of the Force," Cambridge Books, Cambridge University Press, number 9780521009171, February.
- Jack Hirshleifer, 1993. "The Dark Side of the Force," UCLA Economics Working Papers 702, UCLA Department of Economics.
- James D. Fearon, 2004. "Why Do Some Civil Wars Last So Much Longer than Others?," Journal of Peace Research, Peace Research Institute Oslo, vol. 41(3), pages 275-301, May.
- Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Public Choice, Springer, vol. 63(2), pages 101-112, November.
- Eli Berman & Michael Callen & Joseph H. Felter & Jacob N. Shapiro, 2011. "Do Working Men Rebel? Insurgency and Unemployment in Afghanistan, Iraq, and the Philippines," Journal of Conflict Resolution, Peace Science Society (International), vol. 55(4), pages 496-528, August.
- Ross, Michael L., 2004. "How Do Natural Resources Influence Civil War? Evidence from Thirteen Cases," International Organization, Cambridge University Press, vol. 58(01), pages 35-67, February.
- Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
- Christopher Blattman & Edward Miguel, 2009. "Civil War," NBER Working Papers 14801, National Bureau of Economic Research, Inc.
- Blattman, Christopher & Miguel, Edward, 2009. "Civil War," Center for International and Development Economics Research, Working Paper Series qt90n356hs, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Paul Collier & V. L. Elliott & Håvard Hegre & Anke Hoeffler & Marta Reynal-Querol & Nicholas Sambanis, 2003. "Breaking the Conflict Trap : Civil War and Development Policy," World Bank Publications, The World Bank, number 13938, September.
- David Fielding, 2003. "Modelling Political Instability and Economic Performance: Israeli Investment during the "Intifada"," Economica, London School of Economics and Political Science, vol. 70(277), pages 159-186, February.
- Benjamin Crost & Joseph Felter & Patrick Johnston, 2014. "Aid under Fire: Development Projects and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1833-1856, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:19266. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.