Natural Resources, Civil Conflicts, and Economic Growth

Maxime Menuet

No 2024-05, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: This paper focus on civil conflicts arising from natural resource appropriation in a growth model with rent-seeking behavior and how fiscal policy can mitigate them. Such conflicts, if destructive, make the development trajectory indeterminate. There are two self-fulfilling equilibria, including a poverty-conflict trap associated with large civil conflicts. The resource curse may emerge because of pessimistic household expectations. However, fiscal policy can help overcome the tradeoff between conflict and economic development and partially solve the conflict-based resource curse. In this regard, there is an appropriate sharing of the government budget between military spending and human capital investment that minimizes conflict incentives.

Keywords: natural resource; civil conflict; economic growth; rent-seeking (search for similar items in EconPapers)
JEL-codes: E62 O41 Q20 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2024-03
New Economics Papers: this item is included in nep-env, nep-eur and nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2024-05

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