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Oil Price Shocks and Conflict Escalation: Onshore versus Offshore

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  • Jørgen Juel Andersen
  • Frode Martin Nordvik
  • Andrea Tesei

Abstract

We reconsider the relationship between oil and conflict, focusing on the location of oil resources. In a panel of 132 countries over the period 1962-2009, we show that oil windfalls escalate conflict in onshore-rich countries, while they de-escalate conflict in offshore-rich countries. We use a model to illustrate how these opposite effects can be explained by a fighting capacity mechanism, whereby the government can use offshore oil income to increase its fighting capacity, while onshore oil may be looted by oppositional groups to finance a rebellion. We provide empirical evidence supporting this interpretation: we find that oil price windfalls increase both the number and strength of active rebel groups in onshore-rich countries, while they strengthen the government in offshore-rich ones.

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  • Jørgen Juel Andersen & Frode Martin Nordvik & Andrea Tesei, 2022. "Oil Price Shocks and Conflict Escalation: Onshore versus Offshore," Journal of Conflict Resolution, Peace Science Society (International), vol. 66(2), pages 327-356, February.
    • Handle: RePEc:sae:jocore:v:66:y:2022:i:2:p:327-356
    DOI: 10.1177/00220027211042664
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    Cited by:

    1. Korn, Tobias, 2023. "The Persistent Consequences of Civil Conflict: Evidence from a New Measure for Subnational Conflict Exposure," Hannover Economic Papers (HEP) dp-711, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. Bharati, Tushar & Jetter, Michael & Malik, Muhammad Nauman, 2024. "Types of communications technology and civil conflict," Journal of Development Economics, Elsevier, vol. 170(C).
    3. Hamang, Jonas, 2024. "Economic development and known natural resource endowment: Discovery rate differentials of oil," Journal of Development Economics, Elsevier, vol. 170(C).
    4. Massimo Morelli & Dominic Rohner, 2023. "Natural resources and conflict: The crucial role of power mismatch and geographic asymmetries," Working Papers 698, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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    More about this item

    Keywords

    natural resources; conflict;

    JEL classification:

    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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