Predation, Taxation, Investment, and Violence: Evidence from the Philippines

Eli Berman, Joseph Felter, Ethan Kapstein and Erin Troland

No 18375, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The literature relating economic activity to political violence posits greedy rebels (Collier, 2000) but not greedy governments. Could capturing tax revenue motivate governments to step up their counter insurgency operations, just as extortion motivates rebel violence? Panel data on political violence in the Philippines distinguish government from rebel attacks, which we link to private investment across 70 provinces. To formally explore these data we expand an established theory of asymmetric substate conflict –the “information-centric” model, adding firms, investment, taxation and predation (i.e., extortionary violence by rebels in response to investment) to the interplay of government, rebels and civilians, generating testable implications. The data show that increases in investment predict increases in both government-initiated attacks and rebel-initiated attacks. In the year following increased investment government attacks decrease. In the context of our expanded model, these empirical results suggest that both rebels and governments contest economic rents.

JEL-codes: F52 F54 H41 H56 K42 N47 O1 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-dev
Note: PE POL
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Predation, Taxation, Investment, and Violence: Evidence from the Philippines (2014)
Working Paper: Predation, Taxation, Investment and Violence: Evidence from the Philippines (2013)
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