Corruption,conflict and the management of natural resources

The documented link between natural resources and civil conflict is not well understood. This paper uses a political economy framework to explore the prevalence of resource-based civil conflict driven by group-level discontent. The theoretical model proposed here offers a policy-based explanation: under conditions related to the quality of governance, discontent about resource management can affect the likelihood of an insurgency. Resource policy arises endogenously as the corrupt government trades-off industry contributions and the cost induced by manifestations of resource-related discontent. The conservation effects of civil unrest are analyzed and government corruption emerges as an important determinant of conflict. The paper also presents some empirical support for the model’s predictions.