Sharing oil rents and political violence |
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| Institution: | 1. Development Economics (DEC), The World Bank, 1818 H St. NW, Washington, DC, 20433, USA;2. Macroeconomics and Fiscal Management (MFM), The World Bank, 1818 H St. NW, Washington, DC, 20433, USA;1. Economics Department, University of Genoa, Italy;2. Bangor Business School, Bangor, United Kingdom;3. Political Science Department, University of Genoa, Italy;1. Etla Economic Research, Finland;2. Ministry of Economic Affairs and Employment, Finland;3. University of Helsinki, Finland;1. Kellogg School of Management, Northwestern University, Evanston, IL, 60208, USA;2. Department of Economics and Business Administration, Ariel University, Ariel, 40700, Israel |
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| Abstract: | This paper investigates how the devolution of oil windfalls affects the likelihood of political violence. It shows that transferring large shares of oil wealth can prevent conflict, while transferring small shares can trigger it. Among the different transfer schemes, fiscal transfers (to subnational governments) yield the highest levels of consumption, but direct transfers (to people) are the most effective in preventing conflict. By averting conflict, transfers can improve ex ante welfare; however, only a subset of the ex ante welfare optimal transfers is optimal ex post and thus self-enforcing. Among them, those that avert conflict by reinforcing repressive regimes are of particular policy interest. |
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| Keywords: | Natural resources Conflict Redistribution Aggregative games C72 D74 H41 H56 H71 O13 Q34 |
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