Resources, Conflict, and Economic Development in Africa
Publisher: National Bureau of Economic Research
Author(s): Achyuta Adhvaryu, James Fenske, Gaurav Khanna, and Anant Nyshadham
Date: 2019
Topics: Economic Recovery, Extractive Resources, Governance
Evidence suggests that natural resources have driven conflict and underdevelopment in modern Africa. We show that this relationship exists primarily when neighboring regions are resource rich. When neighbors are resource-poor, own resources instead drive economic growth. To better understand this set of facts, we study a model of parties engaged in potential conflict over resources, revealing that economic prosperity is a function of equilibrium conflict prevalence, determined not just by a region’s own resources but also by the resources of its neighbors. Structural estimates confirm the model’s predictions, and reveal that conflict equilibria are more prevalent where institutional quality is worse.