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

Eli Berman, Joseph Felter, Ethan Kapstein and Erin Troland

No 197197, 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California from International Agricultural Trade Research Consortium

Abstract: The literature relating economic activity to political violence has greedy rebels (Collier; 2000) but not greedy governments. Yet capturing tax revenue might motivate governments to control territory; just as capturing extortion revenues motivates rebels. 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; by 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. Necessary conditions for predation are sufficient to imply “tax capture” (i.e.; violence by government in response to investment.) In the context of the expanded model; these results are consistent with tax capture and predation; and weigh against a dominant role for other mechanisms linking investment and violence; such as opportunity costs or a grievance-based mechanism. The data show that increases in investment predict increases in government attacks; as well as increases in rebel attacks. The “tax capture” response reverses in the following year.

Keywords: International Development; International Relations/Trade; Public Economics (search for similar items in EconPapers)
Pages: 54
Date: 2014-10
New Economics Papers: this item is included in nep-sea
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https://ageconsearch.umn.edu/record/197197/files/Theme%20Day%20-%20Berman.pdf (application/pdf)

Related works:
Working Paper: Predation, Taxation, Investment and Violence: Evidence from the Philippines (2013)
Working Paper: Predation, Taxation, Investment, and Violence: Evidence from the Philippines (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iats14:197197

DOI: 10.22004/ag.econ.197197

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