Commodity price shocks and civil conflict: Evidence from Colombia

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 i...

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Autores:
Tipo de recurso:
Fecha de publicación:
2013
Institución:
Universidad del Rosario
Repositorio:
Repositorio EdocUR - U. Rosario
Idioma:
eng
OAI Identifier:
oai:repository.urosario.edu.co:10336/22947
Acceso en línea:
https://doi.org/10.1093/restud/rdt009
https://repository.urosario.edu.co/handle/10336/22947
Palabra clave:
Civil war
Commodity market
Commodity price
Export
Income distribution
International trade
Natural resource
Colombia
Commodity prices
Conflict
Income shocks
Natural resources
Rights
License
Abierto (Texto Completo)
Description
Summary: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. © The Author 2013. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.