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Resource Cursed or Policy Cursed? US Regulation of Conflict Minerals and Violence in the Congo

Dominic Parker and Bryan Vadheim

Journal of the Association of Environmental and Resource Economists, 2017, vol. 4, issue 1, 1 - 49

Abstract: There is widespread belief that civil conflict in poorly governed countries is triggered by surging international demand for their natural resources. We study the consequences of US legislation grounded in this belief, the "conflict minerals" section of the 2010 Dodd-Frank Act. Targeting the eastern Democratic Republic of the Congo, it cuts funding to warlords by discouraging manufacturers from sourcing tin, tungsten, and tantalum from the region. Building from Mancur Olson's stationary bandit metaphor, we describe some channels through which the legislation could backfire, inciting violence. Using georeferenced data, we find the legislation increased looting of civilians and shifted militia battles toward unregulated gold-mining territories. These findings are a cautionary tale about the possible unintended consequences of imposing boycotts, trade embargoes, and resource certification schemes on war-torn regions.

Date: 2017
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Handle: RePEc:ucp:jaerec:doi:10.1086/689865