reference : Commodity price shocks and civil conflict: Evidence from Colombia

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Bibliographic fields
reftype Journal Article
Abstract How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict. We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not). We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect. We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity.
Author Dube, Oeindrila; Vargas, Juan F.
DOI 10.1093/restud/rdt009
ISSN 0034-6527
Issue 4
Journal The Review of Economic Studies
Notes 10.1093/restud/rdt009
Pages 1384-1421
Title Commodity price shocks and civil conflict: Evidence from Colombia
Volume 80
Year 2013
Bibliographic identifiers
_record_number 22080
_uuid 21dfc644-70cb-4784-a6fb-df36f23bf7da