Conflicts, Security and Development: Capturing potential complementarities from econometric and case study approaches Ri

1. Conflicts, Security and Development: Capturing potential complementarities from econometric and case study approachesRichard Auty (Lancaster University) Thesis Closer links with case studies can benefit econometric analysis because case studies:1. Help set tightly focused econometric studies in their broader developmental context 2. Generate insights to suggest sharper proxy variables for econometric analysis

2. Growth Collapses Often Precede Strife: What Successful Cases Reveal Mansoob identifies institutions as key transmission mechanism, May risk making institutions latest in Easterly’s line of ‘failed’ silver bullets because analysis of growth collapses and recovery point to stronger roles for factors other than institutions. Assumes point linkages adversely affect development and associated with mines (true) + plantations (dubious) whereas diffuse linkages of peasant cash crop production are beneficial for growth (true), but: a) If so, SSA countries like Ghana should outstrip Asian countries like Malaysia b) Conversion of diffuse linkages to point linkages appeared sanctioned by interventionist economic policies, notably ISI that became fashionable during 1950s + 1960s.

3. Natural resource endowment and growth collapses

4. Growth Collapses 1973-85 of Economies Weakened by Two Decades of Policy-Induced Cumulative Distortion Triggered New Policies to Shrink Role of Predatory Government, Which Worked More Effectively In: i) Large economies than small ones ii) Resource-poor economies than resource-rich iii) Countries near dynamic de-industrialising advanced economy > countries in remote regions/ near large moribund economies iv) Market reform incremental + endogenous, rather than rapid + externally imposed. Institutions don’t show up here, let alone dominate

5. Natural Resources, Growth Collapses and Incentives for Civil Strife Growth collapses may not be the ‘trigger’ for civil strife but provide conditions in which such triggers easily emerge. Consistent with Collier (2000), civil strife strong where a. Primary exports, b. Economic decline (i.e. a growth collapse), which leaves a relatively large young male population (also linked to growth collapse because collapse retards demographic cycle), with little education so conflict offers immediate financial gain. In this broader context, civil strife exacerbates degradation of capital that is the legacy of a growth collapse and injects a desire for revenge as an added complication in seeking post-war reconstruction.

6. Factoring in Relationship Between Civil Strife + Scale of Rent Literature suggests positive relationship between civil conflict + drugs: Expansion of illicit drug trade draws domestic economic activity out of the formal economy and thereby diminishes government revenue while increasing public expenditure on security = undermines government legitimacy. Results suggest: i) Both share of taxes in GDP + share of income taxes within total taxes are lower in high-drug economies. ii) Corruption + civil strife are higher in drug-producing countries. iii) Indirect link: both lower government expenditure + perceived government corruption feed civil strife, but perceived corruption seems more influential (cuts government moral authority).

7. Drug-Fuelled Civil Strife as an Extreme Case of Rent Capture (whether natural resource rent, geopolitical rent (foreign aid) or contrived rent (change relative prices)) Rent is > 40% of GDP in most LDCs. a) High rent encourages governments to redistribute at expense of incentives for wealth creation. Scale of LDC rent makes little wonder many governments corrupted when invited to override markets b) Drugs = extreme on continuum of rent capture + deployment, with resource-poor countries at other extreme (e..g. Mauritius + East Asian four). c) Corrective policy = practical strategy to re-channel rent from redistribution, which can spiral into violence, -> broad-based wealth creation.

8. Share of Rents in GDP 1994 and GDP Growth 1985-97 (World Bank 1999)

9. Can More Nuanced Classifications Shed More Insight into Ethnicity, Civil Strife + Public Expenditure? Findings clear and refute literature: Factionalism does not increase militarization and so cannot cause the observed lower public spending. Heterogeneity may depress long-term growth because sweeteners (rent) may be key part of process by which ethnic groups resolve tensions in heterogeneous societies, at the expense of public expenditure. May be able to say more about ethnic heterogeneity by deploying more nuanced classification of LDC political state, beyond democracy + autocracy

10. Evolution of Political Accountability Under High Rent

11. Evolution of Political Accountability Under Low Rent

12. Conclusion It might help while flying at 40,000 feet to have more input from ground control. For example: 1. Civil strife appears to grow out of growth collapses and the cumulative degradation of all forms of capital which that process entails 2. Patterns of rent flows derived from case studies reveal a lot about the process of economic development. 3. A more elaborate classification of political states should remove the blurring that arises from a simple dual classification, for example