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Giant Oil Discoveries and Conflicts

Carolyn Chisadza, Matthew Clance (), Rangan Gupta () and Mark Wohar ()

No 201964, Working Papers from University of Pretoria, Department of Economics

Abstract: This study investigates the impact of oil discoveries on conflict. We argue that rents from resources are only part of the resource curse story, with discoveries of natural resources being just as prominent. Using a new measure for oil discoveries for a global panel of countries between 1960 and 2012, we find a positive correlation between oil discoveries and conflict, controlling for regional effects and other conflict determinants. Further analysis by type of conflict reveals that the discovery of oil deposits increases intrastate conflict in relation to interstate conflict, more so ethnic violence within countries. These effects are evident within a year of discovering the oil, and are persistent for over ten years after the discovery. The results also indicate that North Africa and Middle East countries are the most affected by oil discoveries in relation to other global regions. We find similar positive effects on conflict with quantity of oil discovered, as well as the expectation of oil discoveries. Interestingly, while institutions have a significant non-linear effect on conflict, they appear to have no significant mitigating effect when interacted with oil discoveries. The implication of this result may allude to countries with natural resources needing more transparent institutions to alleviate the resource curse. Overall, we believe the results from this study will provide some further understanding to the complex nature involving natural resources and incidences of conflict.

Keywords: panel data; conflict; natural resources (search for similar items in EconPapers)
JEL-codes: C23 O13 O50 Q34 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-08
New Economics Papers: this item is included in nep-dev, nep-ene, nep-env and nep-gro
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