The Conflict Resource Curse:
Insights from a Formal Bargaining Approach
Does oil production cause violent conflict? I contribute to ongoing debates by applying formal bargaining theory to scrutinize how oil wealth affects government-rebel interactions. My main dissertation paper published in International Organization argues we need to rethink a central theoretical underpinning for the conflict resource curse: oil-rich states are vulnerable prizes of predation. Instead, it scrutinizes the revenue-enhancing effects of oil to explain why oil decreases prospects for center-seeking civil wars. But this focus also raises a new puzzle: why do oil-rich ethnic minority groups fight separatist civil wars at elevated rates? I argue that that local oil wealth causes grievances by enabling high levels of government taxation. Furthermore, the high opportunity cost of lowering tax rates on the valuable prize undermines the government's incentives to alleviate grievances—i.e., minimizing separatist civil war risk does not maximize government utility. Cross-national and ethnic group-level statistical evidence as well as historical evidence supports the main theoretical implications.
Abstract: A broad literature on how oil wealth affects civil war onset argues oil production engenders violent contests to capture a valuable prize from vulnerable governments. However, research linking oil wealth to durable authoritarian regimes argues oil-rich governments deter societal challenges by strategically allocating enormous revenues to enhance military capacity and provide patronage. This article presents a formal model that jointly evaluates how these competing mechanisms affect incentives for center- seeking civil wars and yields two key implications. First, large oil-generated revenues strengthen the government and exert an overall effect that decreases center-seeking civil war propensity. Second, oil revenues are less effective at preventing center-seeking civil war relative to other revenue sources, which distinguishes overall and relative effects. Revised statistical results test overall rather than relative effects by omitting the conventional but post-treatment covariate of income per capita, and demonstrate a consistent negative association between oil wealth and center-seeking civil war onset.
Abstract: Oil-rich regions fight separatist civil wars relatively frequently—the core empirical finding about resources and conflict. However, leading “greed” and “grievances” explanations posit contradictory premises and do not articulate what is unique about oil to explain bargaining breakdown. This paper examines key features of oil production and then studies a stochastic bargaining game between a government and regional challenger, which can protect its economic production by exiting the formal economy or by coercively seceding. Three contributions follow. (1) The paper elucidates core aspects of oil production that generate “redistributive grievances,” but usually not greed rebellions. (2) It improves grievance arguments by theoretically linking capital-intense and immobile oil production to bargaining failure via undermining the challenger’s economic exit option. This logic also explains strategic governments’ preferences to risk fighting rather than to grant limited regional autonomy to oil-producing regions. (3) Parameterizing oil production enables studying how various economic activities affect separatist incentives.
Abstract: This paper presents a theory of strategic civil war aims and applies it to explain an empirical puzzle from the oil-conflict literature: oil wealth correlates positively with separatist civil war onset (among oil-rich ethnic minorities), but negatively with civil wars to capture the center. The model formally analyzes a bargaining interaction between a government and a regional ethnic challenger. Either actor may produce oil in their region. If the challenger fights, then it chooses civil war aims. The main explanation for the mixed empirical pattern invokes strategic selection: small ethnic groups are (1) more likely to be politically marginalized, exacerbating the government's commitment problem and (2) more likely to secede if they fight. A reinforcing consideration is that oil-funded repression more effectively deters challenges against the center than in the periphery. Examining relationships among commitment problems, ethnicity, and civil war aims yields broader implications for studying civil war.