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A New Resource Curse: How Externalities and Governance Shape Social Conflict

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  • Renard Sexton

    (Princeton University)

Abstract

Natural resource extraction is increasingly important in many developing countries, but harmful externalities threaten the viability of the sector. This paper articulates and finds evidence for a new ‘resource curse,’ whereby negative side effects from resource extraction increase social conflict in nearby communities. Using micro-level data on extractive commodities, water pollution, children’s and livestock health, local government quality and mining-related social conflict in Peru, this study shows that rising international prices increase conflict, pollution and negative health effects, but not public spending in mining areas. These effects disappear when local government is high quality, indicating that good governance can temper the effects of this new resource curse.

Suggested Citation

  • Renard Sexton, 2018. "A New Resource Curse: How Externalities and Governance Shape Social Conflict," Empirical Studies of Conflict Project (ESOC) Working Papers 9, Empirical Studies of Conflict Project.
  • Handle: RePEc:pri:esocpu:9
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    File URL: https://esoc.princeton.edu/wp9
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    Keywords

    Peru; Conflict; Natural resources; Externalities; Governance;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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