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)
Cotet, Anca M., and Kevin K. Tsui.
"Oil and Conflict: What Does the Cross Country Evidence Really Show?"
American Economic Journal: Macroeconomics,
Conflict; Conflict Resolution; Alliances
National Security and War
Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
Natural Resources and Domestic and International Conflicts
Energy: Demand and Supply