Oil and Civil Conflict: On and Off (Shore)

33 Pages Posted: 16 Mar 2017

See all articles by Jørgen Juel Andersen

Jørgen Juel Andersen

Norwegian School of Management (BI)

Frode Martin Nordvik

Kristiania University College

Andrea Tesei

Queen Mary University of London - School of Economics and Finance

Date Written: February 21, 2017

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.

Keywords: natural resources, conflict

JEL Classification: O130, D740, Q340, Q350

Suggested Citation

Andersen, Jørgen Juel and Nordvik, Frode Martin and Tesei, Andrea, Oil and Civil Conflict: On and Off (Shore) (February 21, 2017). CESifo Working Paper Series No. 6346, Available at SSRN: https://ssrn.com/abstract=2933428

Jørgen Juel Andersen

Norwegian School of Management (BI) ( email )

P.O. Box 580
NO - 1302 Sandvika
Norway

Frode Martin Nordvik

Kristiania University College ( email )

Prinsensgate 7
Oslo, 0152
Norway

Andrea Tesei (Contact Author)

Queen Mary University of London - School of Economics and Finance ( email )

Lincoln's Inn Fields
Mile End Rd.
London, E1 4NS
United Kingdom

HOME PAGE: http://andreatesei.com

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