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Natural resource rents and internal conflicts: Can decentralization lift the curse?

Mohammad Reza Farzanegan (), Christian Lessmann and Gunther Markwardt

Economic Systems, 2018, vol. 42, issue 2, 186-205

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: Natural resources; Risk of conflict; Decentralization (search for similar items in EconPapers)
JEL-codes: H77 P48 Q34 Q38 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Natural-Resource Rents and Internal Conflicts - Can Decentralization Lift the Curse? (2013) Downloads
Working Paper: Natural-resource rents and internal conflicts - Can decentralization lift the curse? (2013) Downloads
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Handle: RePEc:eee:ecosys:v:42:y:2018:i:2:p:186-205