Conflict Diamonds

Ola Olsson

No 86, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: ’Conflict diamonds’ refers to the fatal role that diamonds are believed to have played in several African conflicts. The article analyzes the impact of diamond abundance on economic growth in light of the broader, previously discovered empirical finding of a ’curse of natural resources’. By extending the theory of appropriative conflict, a predator-prey game is outlined in which a rebel chooses between peaceful production and predation on natural resources controlled by the ruler. It is shown that whereas an increase in natural resources might increase the ruler’s public utility investments, it might also lead to a crowding-out in favor of defense spendings, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a ’U-shaped’ relationship with economic growth.

Keywords: diamonds; appropriative conflict; curse of natural resources; growth; predation (search for similar items in EconPapers)
JEL-codes: O13 O40 Q32 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-01-09, Revised 2003-11-30
New Economics Papers: this item is included in nep-dev and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Conflict diamonds (2007)
Working Paper: Conflict Diamonds (2004)
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