Economics of
Conflict and Peace
Topic 2:
Peace and Conflict Factors in Economic
Science
Part 1: The Economic Origins of Conflict
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.
The explanations of relations between the wealth
of a nation and conflict
1) 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?”)
2) 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
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
Natural Resources and Conflict
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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.
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
Core reading
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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. 537566
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