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Natural-resource rents and internal conflicts - Can decentralization lift the curse?

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  • Markwardt, Gunther
  • Farzanegan, Mohammad
  • Leßmann, Christian

Abstract

We study how natural-resource rents a ffect the risk of internal conflict within countries and how the federal structure of countries influences this relationship. Natural-resource abundance may induce excessive rent-seeking and thus increase the risk of internal conflict. Fiscal and political decentralization as an institutional arrangement for rent-sharing and political codetermination of regions within a country may limit the destructive e ffect of the natural-resource rents on internal stability. Using cross-country and panel data covering the period 1984{2004 from more than 90 countries, we find evidence that natural-resource rents indeed increase the risk of internal conflict, but this relationship is signi cantly mitigated by decentralization.

Suggested Citation

  • Markwardt, Gunther & Farzanegan, Mohammad & Leßmann, Christian, 2013. "Natural-resource rents and internal conflicts - Can decentralization lift the curse?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79940, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc13:79940
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    Cited by:

    1. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2014. "Resource Rents, Power, and Political Stability," CESifo Working Paper Series 4727, CESifo Group Munich.
    2. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2015. "Natural-Resource Rents and Political Stability in the Middle East and North Africa," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(3), pages 33-37, October.
    3. Mohammad Reza Farzanegan & Stefan Witthuhn, 2014. "Demographic Transition and Political Stability: Does Corruption Matter?," CESifo Working Paper Series 5133, CESifo Group Munich.
    4. Christian Leßmann & Arne Steinkraus, 2017. "The Geography of Natural Resources, Ethnic Inequality and Development," CESifo Working Paper Series 6299, CESifo Group Munich.
    5. repec:ces:ifodic:v:13:y:2015:i:3:p:19173861 is not listed on IDEAS
    6. Driouchi, Ahmed & Harkat, Tahar, 2016. "Knowledge Economy, Global Innovation Indices, Rents and Governance in Arab Economies," MPRA Paper 73507, University Library of Munich, Germany.
    7. Mohammad Reza Farzanegan & Mohammad Habibpour, 2014. "Direct Distribution of Rents and the Resource Curse in Iran: A Micro-econometric Analysis," CESifo Working Paper Series 4824, CESifo Group Munich.
    8. Miller, Rebecca, 2015. "Natural resource extraction and political trust," Resources Policy, Elsevier, vol. 45(C), pages 165-172.

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    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment

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