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

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

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.

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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79940.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:79940
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