IDEAS home Printed from https://ideas.repec.org/p/pri/esocpu/6.html
   My bibliography  Save this paper

Concession Stands: How Foreign Investment Incites Protest in Africa

Author

Listed:
  • Darin Christensen

    (UCLA)

Abstract

Why do foreign investments that can improve economic welfare also induce protest? Using a newly compiled dataset on commercial mining, commodity prices, and protest in Africa, I first establish that foreign investment projects increase the probability of protest. I then develop a theoretical model to explain these conflicts. I argue that communities have to strike a bargain with companies but have limited information about the value of the project they are hosting. When communities’ expectations exceed what companies are willing to pay, protests result. I marshal two pieces of empirical evidence consistent with this model: first, protests are more likely when mineral prices are elevated and, thus, communities hold inflated expectations about mining projects’ margins; and second, this relationship between mineral prices and protests is mitigated by policies that increase transparency and, thus, help correct the informational asymmetry that generates conflict. I do not find empirical support for common alternative explanations for protest related to environmental risks, in-migration, inequality within mining communities, corruption, or reporting bias. Despite claims that resource extraction fuels armed conflict, I also do not find that these commercial mining projects increase the likelihood of rebel activity at or near mine sites. The conflicts we observe in mining communities are better understood as a consequence of conflictual bargaining over profits than instances of predation by insurgents.

Suggested Citation

  • Darin Christensen, 2016. "Concession Stands: How Foreign Investment Incites Protest in Africa," Empirical Studies of Conflict Project (ESOC) Working Papers 6, Empirical Studies of Conflict Project.
  • Handle: RePEc:pri:esocpu:6
    as

    Download full text from publisher

    File URL: https://esoc.princeton.edu/wp6
    Download Restriction: no

    More about this item

    Keywords

    Violence; Geography; Economic Development; Africa;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pri:esocpu:6. 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: (Bobray Bordelon). General contact details of provider: http://esoc.princeton.edu .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.