Economics of Conflict and Peace

1. Economics of Conflict and Peace Topic 2: Peace and Conflict Factors in Economic Science Part 1: The Economic Origins of Conflict

2. The Economic Origins of Conflict Wealth and War: Striking relationship between wealth of a nation and its chances of having a civil conflict (a country with GDP USD 250 has a predicted probability of war of 15%; this probability is 4% for country with GDP of USD 1250) – World Bank econometric models. See: Collier, Paul, 2000, “Economic Causes of Civil Conflict and their Implication for Policy”. World Bank Working Paper.

3. The explanations of relations between the wealth of a nation and conflict • Wealthier societies are better able to protect asserts, thus making violence less attractive for would-be rebels (Fearon, James, 2002 “Why do some civil wars last so much than others?”) • Poverty causes violence; scarcity leads to migration that results in conflict between identity groups for resources (Homer-Dixon, Thomas, 1994. Environmental Scarcities and Violent Conflict: Evidence from Cases, International Security, Vol.16, N.4, pp.4-40

4. Inequality and Conflict Inequality is ‘differences among people in their command over social and economic resources (International Encyclopedia of the Social and Behavioral Sciences) Inequality which lines of individuals or households up vertically and measures inequality over the range of individuals – vertical inequality; Inequality between culturally defined groups – horizontal inequality. Unequal access to political/economic/social resources by different cultural groups can reduce individual welfare of the individuals in the losing groups over and above what their individual position would merit, because their self-esteem is bound up with the progress of the groups. Horizontal inequality produces grievances which facilitate mobilization which in turn increases chances of rebellion. Stewart Frances (2002) Horizontal Inequalities: A Neglected Dimension of Development. WIDER Working Paper Gurr, Ted Robert and Will H. Moor. 1997. “Ethnopolitical Rebellion: A Cross-Sectional Analysis of the 1980s with Risk Assessment for the 1990s. American Journal of Political Science

5. Natural Resources and Conflict Rival mechanisms that explain the relationship between natural resource and conflict: • Natural resources could provide a way to finance rebellions that have been started for other reasons thereby increasing the prospects of success. If so, then there should be reasons to take these other reasons into account when responding to conflicts; • If natural resources are concentrated in a particular region of a country this may ground beliefs among dissatisfied groups that a seceding state could be viable and prosperous; • Natural resource dependence could in fact be associated with grievances rather than greed. Countries with middling levels of dependence on natural resources may be experiencing transitory inequality as part of the development process. Alternatively, extraction may produce grievances through forced migration. Or finally, natural resources wealth may be sees as more unjustly distributed than other wealth; • Governments that rely on natural resources rather than taxation for their survival do not need to create strong institutions. Such states have little compulsion to respond to the demands of their citizens; • Changes in the value of natural resources can weaken the manufacturing sector of an economy – an effect of “Dutch Disease”; • Economies that are dependent on natural resources may be more vulnerable to terms of trade shocks. These could cause instability and dissatisfaction within groups that suffer from the shocks; • The existence of natural resources may be an incentive for third parties – states and corporations – to engage in or indeed foster civil conflicts.

6. Trade and War • Trade increases conflict (‘realist school of IR, has historically been associated with mercantilism); • Colonial wars as being for control of world markets (Marxist theorists); • Liberal theorists focus more on the gains to both parties from trade; trade is mutually beneficial, so flight with a trading partner would be ‘commercial suicide”. Through exchange, trading partners develop greater understanding for each others’ cultures. • Political philosophers suggest that trade reduces the risk of conflict because trade alters cultures: that there is something about trade that makes people less violent

7. Core reading • Collier, P. (2000), ‘Economic Causes of Civil Conflict and Their Implications For Policy’, World Bank, 15 June 2000, www.globalpolicy.org/security/issues/diamond/wb.htm • Copeland Dale C. Economic Interdependence and War: Theory of Trade Expectations in Brown Michael. Theories of War and Peace, The MIT Press, pgs. 501-537 • Homer-Dixon Thomas F. Environmental Scarcities and Violent Conflict: Evidence form Cases, in Brown Michael. Theories of War and Peace, The MIT Press, pgs. 537-566 • Le Billon, Philippe. ‘The Political Economy of War: What Relief Workers Need to Know’, ODI, Humanitarian Practice Network Paper no. 33, July 2000 • Nafziger, E. Wayne and Juha Auvinen, Economic Development, Inequality, War and State Violence: Humanitarian Emergencies in Developing Countries, London: Palgrave, 2003; • Fearon James. Why Do Some Civil Wars Last So Much Longer than Others? Working Paper. Stanford University