Oil price shocks and conflict escalation: onshore versus offshore

Jørgen Andersen, Frode Martin Nordvik and Andrea Tesei

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We reconsider the relationship between oil and conflict, focusing on the location of oil resources. In a panel of 132 countries over the period 1962-2009, we show that oil windfalls escalate conflict in onshore-rich countries, while they de-escalate conflict in offshore-rich countries. We use a model to illustrate how these opposite effects can be explained by a fighting capacity mechanism, whereby the government can use offshore oil income to increase its fighting capacity, while onshore oil may be looted by oppositional groups to finance a rebellion. We provide empirical evidence supporting this interpretation: we find that oil price windfalls increase both the number and strength of active rebel groups in onshore-rich countries, while they strengthen the government in offshore-rich ones.

Keywords: conflict; natural resources (search for similar items in EconPapers)
JEL-codes: J01 N0 R14 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2022-02-01
New Economics Papers: this item is included in nep-ene and nep-his
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Citations: View citations in EconPapers (2)

Published in Journal of Conflict Resolution, 1, February, 2022, 66(2), pp. 327 - 356. ISSN: 0022-0027

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http://eprints.lse.ac.uk/113703/ Open access version. (application/pdf)

Related works:
Journal Article: Oil Price Shocks and Conflict Escalation: Onshore versus Offshore (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:113703

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