Fragile States and Conflict Recurrence..

About 1bn people live in failing states. Their lives are plagued by insecurity and poverty. Failing states are marginalized and if current trends continue they will be lagging even further behind in the future; trapped in a vicious cycle of underdevelopment and violent conflict. Thus, the definition of state failure focuses on two main aspects: failure to provide security and the failure to provide economic opportunities. State failure is costly in human and economic terms. It imposes costs not only to the citizens of their own state but even higher costs to other states in the region. Turning around failed states is an enormous challenge. Ultimately, the change has to come from within the country but the chapter also discusses what the international community can do to assist.

Global Aid Allocation: Are Nordic Donors Different?

The Nordic development assistance programs have earned a reputation for commitment to human rights and democracy. Is the reputation deserved? We address this question by comparing how much aid donors give and to which recipient countries. Using a global panel data set, spanning the period 1980-99 and 91 recipient countries, we find that individual bilateral donors vary considerably from one another. Nordic aid distribution differs significantly from other bilateral aid donor patterns: Norway, Denmark, Sweden and Finland provide more aid to democracies but do not penalise poor trade policies. Unlike other bilateral donors the four Nordics do not provide more aid to political allies. We also find some evidence that recipients with a good human rights record receive more aid from Nordic donors.

Do Elections Matter for Economic Performance?

In mature democracies, elections discipline leaders to deliver good economic performance. Since the fall of the Soviet Union most developing countries also hold elections, but these are often marred by illicit tactics. Using a new global data set, this paper investigates whether these illicit tactics are merely blemishes or substantially undermine the economic efficacy of elections. We show that illicit tactics are widespread, and that they reduce the incentive for governments to deliver good economic performance. Revisiting the celebrated result that ‘leaders matter’, we show that it is dependent upon the absence of clean elections: changes of leader matter a lot in systems without clean elections, whereas in those with clean elections they are not significant.

Military expenditure - threats, aid, and arms races

Using global data for the period 1960-99, the authors estimate neighborhood arms races. They find that the level of military expenditure is strongly influenced by the expenditure of neighbors. The authors estimate an"arms race multiplier,"finding that an initial exogenous increase in military expenditure by one country is more than doubled in both the originating country and its neighbor. An implication is that military expenditure is, to an extent, a"regional public bad."Potentially, there is an offsetting public good effect if rebellions are deterred by military expenditure. However, instrumenting for military expenditure, the authors find no deterrence effect of military spending on the risk of internal conflict. So there appears to be no regional public good effect offsetting the public bad arising from a neighborhood arms race.Payment Systems&Infrastructure,Peace&Peacekeeping,Business Environment,Legal Products,Economic Theory&Research,Peace&Peacekeeping,Legal Products,National Governance,Social Conflict and Violence,Business Environment

Greed and grievance in civil war

The authors compare two contrasting motivations for rebellion: greed and grievance. Most rebellions are ostensibly in pursuit of a cause, supported by a narrative of grievance. But since grievance assuagement through rebellion is a public good that a government will not supply, economists predict such rebellions would be rare. Empirically, many rebellions appear to be linked to the capture of resources (such as diamonds in Angola, and Sierra Leone, drugs in Colombia, and timber in Cambodia). The authors set up a simple rational choice model of greed-rebellion, and contrasts its predictions with those of a simple grievance model. Some countries return to conflict repeatedly. Are they conflict-prone, or is there a feedback effect whereby conflict generates grievance, which in turn generates further conflict? The authors show why such a feedback effect might be present in both greed-motivated and grievance rebellions. The authors'results contrast with conventional beliefs, about the causes of conflict. A stylized version of conventional beliefs would be that grievance begets conflict, which begets grievance, which begets further conflict. With such a model, the only point at which to intervene is to reduce the level of objective grievance. The authors'model suggests that what actually happens is that opportunities for predation (controlling primary commodity exports) cause conflict, and the grievances this generates induce diasporas to finance further conflict. The point of policy intervention here is to reduce the absolute, and relative attraction of primary commodity predation, and to reduce the ability of diasporas to fund rebel movements.Environmental Economics&Policies,Peace&Peacekeeping,Services&Transfers to Poor,Labor Policies,Economic Theory&Research,Social Conflict and Violence,Peace&Peacekeeping,Safety Nets and Transfers,Rural Poverty Reduction,Services&Transfers to Poor

Murder by Numbers: Socio-Economic Determinants of Homicide and Civil War

Deliberate killing is a common part of the defining features of both homicide and civil war. Often, the scale of killing is also similar: most countries have homicide rates that exceed the threshold of one thousand combat-related deaths during a year that is the standard criterion for civil war. What is clearly different is the organization of killing: the perpetrators of homicide are usually individuals or small groups, whereas rebellion – the direct cause of a civil war - requires a cohesive group of at least several hundred killers. Beyond this, the motivation for the two types of killing may differ systematically, although evidently both homicide and rebellion have many different motivations, including error and irrationality. In this paper we investigate whether the socio-economic determinants of homicide and civil war are similar, and then explore potential inter-relationships between them. We compare our existing model of the risk of civil war with a new model of the homicide rate. We find that there is a ‘family resemblance’ between the two types of killing, but surprising differences. Furthermore, we turn to the inter-relationships between homicide and the risk of civil war. Specifically, we ask whether a high rate of homicide makes a country more prone to civil war, and whether a civil war makes a country more prone to homicide. Our results indicate that higher homicide rate do not increase the risk of war but that civil wars generate a legacy of increased post-conflict homicide rates.

Need, Merit or Self-Interest - What Determines the Allocation of Aid?

Previous studies into aid allocation have concluded that foreign aid is allocated not only according to development needs but also according to donor self-interest. We revisit this topic and allow for donor as well as recipient specific effects in our analysis. Our results indicate that roughly half of the predicted value of aid is determined by donor specific effects. Of the remaining variation, recipient need accounts for 36 percent and donor selfinterest or about 16 percent. This suggests that the previous literature has overstated the importance of donor self-interest. However, bilateral donors seem to place little importance on recipient merit. Recipient merit, measured by growth, democracy and human rights, accounts for only two percent of predicted aid.

Democracy’s Achilles Heel or, How to Win an Election without Really Trying

In this paper we investigate the efficacy of illicit electoral tactics and the characteristics which make a society prone to such tactics. We first investigate the chances of an incumbent head of government winning an election. We find that in those elections in which illicit tactics were prevalent the chances of incumbent victory increase substantially, more than doubling the expected duration in office. Further, illicit tactics sharply reduce the importance of good economic performance for survival in office. We then investigate what makes a society prone to illicit electoral tactics. Both structural conditions and institutions matter. Societies that are small, low-income, and resource-rich have little chance of a clean election unless these conditions are offset by checks and balances such as veto points and a free press. Aid has offsetting effects, the net effect being modest. We show that these results are robust to different measures of the conduct of elections and to fixed effects. Finally, we revisit the Jones-Olken result that individual leaders matter for economic performance and find that it holds only where leaders are not disciplined by well-conducted elections.

Military Expenditure in Post-Conflict Societies

Post-conflict situations face a high risk of reversion to conflict. We investigate the effect of military expenditure by the government during the first decade post-conflict on the risk of reversion. We contrast two theories as to the likely effects. In one, military spending deters conflict by reducing the prospects of rebel success. In the other it acts as a signal to the rebels of government intentions. In the signalling model, low military spending signals that the government intends to adhere to the terms of the peace settlement and so reduces the risk of renewed rebellion. We investigate the effects of post-conflict military spending on the risk of conflict, using our existing models of military expenditure and of conflict risk. We find that, consistent with the signalling model, high military spending post-conflict significantly increases the risk of renewed conflict. This effect of military spending is distinctive to post-conflict period, and becomes progressively more pronounced over the decade.

Greed and grievance in civil wars

We investigate the causes of civil war, using a new data set of wars during 1960-99. We test a `greed’ theory focusing on the ability to finance rebellion, against a `grievance’ theory focusing on ethnic and religious divisions, political repression and inequality. We find that greed considerably outperforms grievance. Consistent with the greed theory, both dependence upon primary commodity exports and a large diaspora substantially increase the risk of conflict. Inconsistent with the grievance theory, greater ethnic and religious diversity reduce the risk of conflict. The results are robust to correction for outliers, alternative variable definition, and variations in estimation method.Conflict, Development, Natural Resources, Panel Data