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Examining the Resource Curse: Coffee, Oil, and Armed Conflict in Colombia

This analysis explores the relationship between natural resource dependence and civil war incidence in Colombia, particularly through the lenses of coffee and oil. It discusses how rebels exploit resource rents to finance violence, the influence of commodity prices on government capacity, and the effects of these dynamics on social unrest. By employing difference-in-difference methods with municipality-level panel data, the study assesses the varying impacts of coffee price fluctuations on conflict, highlighting the complexity of the resource curse and the heterogeneous nature of resources and their effects on violence.

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Examining the Resource Curse: Coffee, Oil, and Armed Conflict in Colombia

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  1. Are All Resources Cursed? Coffee, Oil and Armed Conflict in Colombia- Oeindrilla Dube & Juan Vargas Grant Gordon, Gov2782

  2. The Resource Curse The Resource Curse: “The dependence on natural commodities increases the incidence of civil war” (Collier & Hoeffler 2004) • Rebels use stole rents from export to finance violence • Blood Wheat? “Oil exporters have weaker bureaucratic capabilities, which increases the incidence of civil war” (Fearon 2005) • Petroleum drives the findings for all primary commodities • The Mechanism?

  3. Determining The Mechanism Taxes, Strong State & Military Operations Primary Commodity Looting, Extortion Civil Conflict Lack of State Investment; Weakness

  4. The Resource Curse, 2.0 Theoretical Exploration and Parsing: • Factor Intensity of Production Technology • Relative importance of one input (factor) vs. another, compared across industries • Inputs: Capital, Land, Labor • Stolper-Samuelson Theorem • A rise in the relative price of a good increases the return on the factor which is used most intensively in the production of that good and a decrease in all other factors. Thus, the income mechanism (think relatively!): Coffee Price , Income , Opportunity Cost for Rebellion , Violence

  5. Are All Resources Cursed Equally? Heterogeneous Resources, Heterogeneous Mechanisms: • Oil & the government revenue mechanism: Oil Price , Gov Revenue , Security Operations , Violence • Substitution Effects into Coca? • What is the mechanism here? “Some resources are cursed, while others are not” - Sometimes substitution doesn’t happen

  6. The Coffee Crisis Exogenous Crises Make For Good Studies • 1994-1997: Coffee prices increasing • 1997-2003: Precipitous drop in coffee prices Identifying assumption: international prices exogenous to Colombian production

  7. The Data & The Methods The Data • Panel Data: Municipality and Years • IID assumption? Spatio-Temporal Autocorrelation? • Standard Clustered Errors Difference-in-Difference Estimation • Compare impact post-treatment of treatment group to some control group; subtract out treatment effect • Unit of Analysis: Municipalities • Assumption: “That violence levels would not have changed different in coffee and non-coffee areas in the absence of the coffee price shock”

  8. The Findings

  9. But What About? Potential Confounders: • Plan Columbia – clashes & casualties • 1999 Earthquake – not significant; predation unlikely • Changes in Government Regime – not a driving force Oil • Increase in price leads to an increase in security forces • Capital intensive process • Traditional resource curse revisited

  10. The Resource Curse 2.0 “The higher value of this [coffee] commodity in international markets eases social unrest, while a lower value exacerbates politically-motivated violence” Resources vs. Factors of Labor • What is the right way to think of this? Mechanism vs. Decision • Substitution into rebel groups rather than coca?

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