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American Economic Journal: Macroeconomics: Vol. 5 No. 1 (January 2013)

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Oil and Conflict: What Does the Cross Country Evidence Really Show?

Article Citation

Cotet, Anca M., and Kevin K. Tsui. 2013. "Oil and Conflict: What Does the Cross Country Evidence Really Show?" American Economic Journal: Macroeconomics, 5(1): 49-80.

DOI: 10.1257/mac.5.1.49

Abstract

This paper re-examines the effect of oil wealth on political violence. Using a unique historical panel dataset of oil discoveries, we show that simply controlling for country fixed effects removes the statistical association between the value of oil reserves and civil war onset. Other macro-political violence measures, such as coup attempts, are also uncorrelated with oil wealth. To further address endogeneity concerns, we exploit changes in oil reserves due to randomness in the success of oil explorations. We find little robust evidence that oil discoveries increase the likelihood of political violence. Rather, oil discoveries increase military spending in nondemocratic countries. (JEL D74, H56, O17, Q34, Q41)

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Authors

Cotet, Anca M. (Seton Hall U)
Tsui, Kevin K. (Clemson U)

JEL Classifications

D74: Conflict; Conflict Resolution; Alliances
H56: National Security and War
O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
Q34: Natural Resources and Domestic and International Conflicts
Q41: Energy: Demand and Supply

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American Economic Journal: Macroeconomics


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