The Economics of Conflict

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The Economics of Conflict

• Data on conflict
• conflict and poverty
• relationships and transmission mechanisms
• the economics of conflict
• correlates
• macro-level /cross country comparisons
• blood diamonds

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Conflict data

• Occurrence of civil wars - Collier and Hoeffler
• civil wars between 1960 and 1999
• internal conflict between a government and an
  identifiable rebel organisation that results in
  at least 1000 combat-related deaths, of which at
  least 5 must be incurred on each side
• Battle deaths - PRIO
• deaths in battles in armed conflict between 1946
  and 2002
• internal, internationalised and international
  conflict

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Disaggregating War deaths
Soldiers and civilians killed in combat
Battle deaths
One-sided violence
WAR DEATHS
Non-battle deaths
Criminal and unorganised violence
Non-violent mortality
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Usefulness of battle deaths data

• advantages
• indicates size of combat operations
• how many died in combat operations
• includes combatants and non-combatants
• disadvantages
• underestimates full human cost of conflict
• execution of prisoners of war
• upsurge in crime as law breaks down
• disease and starvation

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Problems in measuring war deaths

• Lack of a counter-factual
• would people have starved if there had been
  peace? How many less?
• Would HIV/AIDS have spread as quickly? How much
  slower?
• Lack of pre-conflict census
• Time-frame some deaths occur after conflict has
  ended
• comparability of definitions across countries

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Conflicts with largest battle death totals
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Battle and war deaths selected conflicts
Table 4 Lacina and Gleditsch
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Poverty and Conflict

• How are the poor affected by conflict and how
  does poverty trigger conflict?
• Transmission mechanisms

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Violent conflict as a cause of poverty
Violent conflict
Poverty

• Negatively
• loss of income, destruction of social networks,
  of land, assets and infrastructure insecurity
• breakdown of law and order
• displacement
• detrimental to health (injury, death, disease)
  and education (enrolment, availability of
  teachers)
• Positively
• employment opportunities as fighters
• challenges existing power relations

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Poverty as a trigger for violent conflict
Violent conflict
Poverty

• Social discontent/disadvantage, relative
  deprivation
• alternative to unemployment
• opportunity for looting and other criminal
  activities
• opportunity to challenge status quo
• household dynamics, social decision making, land
  allocation

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Economics of conflict correlates

• WB/Collier and others
• a history of conflict low income stagnant
  income primary commodity dependence and
  inequality
• gives rise to conflict traps
• reverse causality between conflict, income,
  growth etc
• low income poor people may have few options
  other than rebelling
• low growth poor future
• primary commodity dependency high of exports
  from primary products . Easily lootable

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Economics of conflict greed and grievance

• Collier and Hoeffler factors affecting civil war
• Motives
• greed lootable rents, control of natural
  resources
• grievance historical injustices, poverty and
  inter-group inequalities
• role of opportunities
• finance for rebellions blood diamonds, donations
  from diaspora, finance from hostile neighbour
• low costs low foregone income availability of
  military capital, weak government

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Econometric model

• Empirical analysis of country characteristics for
  79 conflicts over 1960 - 1999
• Probability of civil war in a given time period
• correlates include measures of greed, grievance
  and opportunity
• findings
• opportunity very important
• low per capita income significant correlate
• no evidence of grievances
• robustness of findings?

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Micro-studies diamonds are forever, wars are not

• Guidolin and La Ferrara (2006)
• impact of sudden death of rebel leader on share
  price of diamond forms and other non-diamond
  firms in Angola
• what happened to share price?