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Natural resource rents and internal conflicts: Can decentralization lift the curse? |
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| Authors: | Mohammad Reza Farzanegan Christian Lessmann Gunther Markwardt |
| Institution: | 1. Philipps-Universität Marburg, Center for Near and Middle Eastern Studies (CNMS), Economics of the Middle East Research Group, Marburg, Germany;2. MACIE, Marburg, Germany;3. ERF, Cairo, Egypt;4. CESifo, Munich, Germany;5. Institute of Economics, Technische Universität Braunschweig, Braunschweig, Germany;6. Ifo Institute, Germany;g. Faculty of Business and Economics, Technische Universität Dresden, Dresden, Germany |
| Abstract: | We study how natural resource rents affect the risk of internal conflict within countries and how the federal structure of countries influences this relationship. Natural resource abundance may induce excessive rent-seeking and thus increase the risk of internal conflict. Fiscal and political decentralization as an institutional arrangement for rent-sharing and political codetermination of regions within a country may limit the destructive effect of natural resource rents on internal stability. Using cross-country and panel data from more than 90 countries covering the period 1984–2004, we find evidence that natural resource rents indeed increase the risk of internal conflict, but this relationship is significantly mitigated by political decentralization. |
| Keywords: | H77 P48 Q34 Q38 Natural resources Risk of conflict Decentralization |
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