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Oil and Civil Conflict: On and Off (Shore)

Andersen, Jørgen Juel; Nordvik, Frode Martin; Tesei, Andrea
Working paper
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URI
http://hdl.handle.net/11250/2429275
Date
2017
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  • Centre for Applied Macro- and Petroleum economics (CAMP) [104]
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 increase the probability of conflict in onshore-rich countries, while they decrease this probability in offshore-rich countries. We use a simple model of conflict 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 windfalls increase both the number and strength of active rebel groups in onshore-rich countries, while they strengthen the government in offshore-rich ones.
Publisher
BI Norwegian Business School
Series
CAMP Working Paper Series;1/2017

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