This paper focuses on the main factors that contribute to the dangers of violent internal conflict erupting, or re-igniting after a peace has been concluded. The conflict literature has identified greed and grievance as the principle causes of conflict. But for either of them to take the form of large-scale violence there must be other factors at work, specifically a weakening of the 'social contract'. Such a viable social contract can be sufficient to restrain opportunistic behaviour such as theft of resource rents and violent expression of grievance. The social contract, therefore, refers to the mechanisms and institutions of peaceful conflict resolution. Three main risk factors are considered in this briefing: The breakdown of redistributive mechanisms, democratic transitions and lack of economic progress.Conflict, civil war, greed versus grievance, social contract, democratic transition, redistributive mechanisms

Mansoob Murshed

English

Research Papers in Economics

Indicators of Potential 
Conﬂict
  MICROCON Policy Brieﬁng 1    March 2008                   S. Mansoob Murshed
Summary:  This paper focuses on the main factors that contrib-
ute to the dangers of violent internal conﬂict erupting, or re-ig-
niting after a peace has been concluded. The conﬂict literature 
has identiﬁed greed and grievance as the principle causes of 
conﬂict. But for either of them to take the form of large-scale vi-
olence there must be other factors at work, speciﬁcally a weak-
ening of the ʻsocial contractʼ.  Such a viable social contract can 
be sufﬁcient to restrain opportunistic behaviour such as theft of 
resource rents and violent expression of grievance. The social 
contract, therefore, refers to the mechanisms and institutions of 
peaceful conﬂict resolution. Three main risk factors are consid-
ered in this brieﬁng: The breakdown of redistributive mecha-
nisms, democratic transitions and lack of economic progress.
•What causes the mecha-
nisms underlying a social 
contract to degenerate? 
•What circumstances cre-
ate incentives for groups 
within societies to choose 
war rather than resolve 
disputes peacefully?
What  causes  the  mechanisms  un-
derlying a social contract to degen-
erate? The term failed state is inap-
propriate, as very few states actually 
fail  totally;  there  is  degeneration 
rather than the total breakdown of 
the social contract. So what factors 
lead to the breakdown of the social 
contract within a nation state? What 
circumstances create incentives for 
groups  within  societies  to  choose 
war  rather  than  resolve  disputes 
peacefully? 
There are three main risk factors in 
the  breakdown  of  the  social  con-
tract:
1) Redistributive mechanisms
Within nation states, the ﬁscal sys-
tem will secure a workable social 
contract if the allocation of public 
expenditures and the apportionment 
of taxes are judged to be fair, or at 
least not so unfair that some groups 
judge taking resources by force the 
better option. There are many ex-
amples  of  conﬂicts  emerging  out 
of  ﬁscal  disputes.  Côte  dʼIvoire, 
for instance, became unstable with 
the collapse of the social contract 
engineered  by  the  late  President 
Houphouët-Boigny, in which he al-
located public spending across the 
regions to successfully buy the loy-
alty of the countryʼs ethnic groups. 
Disputes  over  the  apportionment 
of revenues from natural resources 
are  especially  common  and,  as  in 
Indonesia  and  Nigeria,  these  take 
on ethnic and regional dimensions. 
Contemporary civil wars are more 
often related to the breakdown of 
explicit or implicit arrangements to 
share resources or revenues, rather 
than the absence of an agreement to 
share resources or rents. One reason 
that a contract to share revenues en-
counters difﬁculties is the imperfect 
credibility with which the side that 
controls the ʻpotʼ honours its com-
mitment.  Indeed,  the  presence  or 
discovery of oil or gas may promote 
secessionist tendencies among 
POLICY BRIEFING 1 MARCH 2008
 POLICY BRIEFING
Hutu refugees in Benaco camp in Tanzania
© Panosgroups who do not wish to share it 
with the rest of the nation.  
2) Democratic transitions
Political science research points out 
that the risk of conﬂict is lower in 
both  well  established  democracies 
and  autocracies.  It  suggests  that 
conﬂict risk is at its highest during 
transitions to and away from democ-
racy when state capacity is weak, 
and also in ﬂedgling and imperfect 
democracies (anocracies). There is 
more  violent  expression  of  griev-
ances during early democratic phas-
es  as  the  aggrieved  feel  suddenly 
empowered. Most developing coun-
tries are imperfect democracies, or 
at an early stage of the democratic 
transition.  In  the  interim  between 
full-blown forms of either autocracy 
or democracy (anocracy) countries 
may have electoral processes which 
characterise democracy, co-existing 
with weak or non-existent separa-
tion of powers between the execu-
tive and the judiciary in particular. 
This not only prevents them from 
functioning  like  true  democracies, 
but impairs governance, especially 
the rule of law. Another problem is 
the widespread electoral violence in 
anocracies. Finally, there is the risk 
that new democracies can periodi-
cally slide back to autocracy engen-
dering a vicious cycle of democracy 
to  autocracy,  back  to  democracy 
and so on. 
Given the imperfect nature of de-
mocracies and good governance in 
most developing countries we need 
to  be  cognizant  of  the  motivation 
and incentives of their rulers. With 
regard to incentives faced by rulers 
in developing countries, it has to be 
remembered that until the end of the 
cold war most developing countries 
were ruled by strong men. In other 
words, they were autocracies. Some 
promoted development, others did 
not. Compare Mobutuʼs Zaire 
Soldiers patrolling the streets of Kathmandu during a curfew in Nepal © Panos
(1965-1997) to Suhartoʼs Indonesia 
(1965-98). In Indonesia and Zaire 
resource ﬂows were volatile. In one 
case the dictator (Suharto) chose di-
versiﬁcation and growth enhancing 
strategies, as well as policies aimed 
at equalisation and poverty reduc-
tion to contain political opposition. 
Development in Indonesia was im-
POLICY BRIEFING 1 MARCH 2008
At a higher income people have a lot more to lose from violent 
forms of conﬂict resolution
pressive, and may have led, at least 
partially,  to  endogenous  demands 
for  democracy.  In  the  other  case 
(Zaire, now DRC), Mobutu did not, 
because he felt that diversiﬁcation 
and  investment  in  infrastructure 
would loosen his grip on power and 
strengthen  political  opposition  to 
him based on ethnicity. Zaire or the 
DRC has perhaps the poorest post-
1960 growth record in the planet. 
Perhaps, in East Asia greater fears 
of communism strengthened benev-
olence  in  dictators  (South  Korea, 
Taiwan, Singapore and Indonesia), 
whereas in Africa a certain type of 
factionalism  dominated  policies 
and  politics,  retarding  growth  en-
hancing  economic  diversiﬁcation 
and infrastructural development.
3) The lack of economic progress
The most robust indicator that pre-
dicts the risk of conﬂict is the lack of 
economic growth and development 
in low income countries. In fact, at 
a higher income people have a lot 
more  to  lose  from  violent  means 
of conﬂict resolution.  The lack of 
growth also increases vulnerability 
to  economic  shocks.  Furthermore, 
the  absence  of  economic  growth 
retards  institutional  development 
(democracy and governance), con-
tributing to the risk of armed con-
ﬂict. It is no surprise that most rich 
countries are peaceful democracies. 
Also, the stateʼs capacity to either 
assuage (through transfers) or sup-
press (by armed force) malcontents 
is weaker the poorer the country in 
question. By the same token, post-
conﬂict economic recovery must be 
inclusive  and  broad-based  to  pre-
vent a new outbreak of grievances.
Synthesis 
To get an empirical feel for some of 
these  channels,  a  descriptive  look 
at the data may be in order. Table 1   
presents the 17 countries with the highest  conﬂict  incidence  since 
1960.  We  compare  growth  rates, 
the  combined  democracy  and  au-
tocracy score known as Polity1, en-
dowment type and conﬂict intensity 
or incidence in selected developing 
countries  during  the  period  1965-
2000. The Polity score is an imper-
fect proxy for institutional capacity 
and governance, but we have good 
time  series  data  on  these.  This  is 
coded 1 for autocracies (those with 
an autocracy score below -4), 3 for 
democracies (for democracy scores 
above 4) and 2 for anocracies that 
have  both  democratic  and  auto-
cratic characteristics (with scores of 
between -4 and 4). The endowment 
typology is based upon a countryʼs 
principal exports2,  and is subject to 
change. Note that countries can have 
more than one year of civil war in 
any given calendar year if there are 
several conﬂicts taking place within 
the nation simultaneously (Burma, 
India etc.). 
From this, we can make a number 
of observations:
(a) Only ﬁve of these high conﬂict 
incidence nations reported in Table 
1 have a per-capita income growth 
rate in excess of 2% per annum in 
the  long-term:  Indonesia,  India, 
Sri Lanka, Colombia and Uganda. 
Generally  speaking,  poor  growth 
performers have more conﬂict years 
in Table 1. Furthermore, only three 
point-sourced  countries  and  four 
coffee/cocoa  economies  did  not 
descend  into  some  form  of  civil 
war.  Diffuse  economies  also  have 
conﬂict; examples of the high inci-
dence of civil wars occurring in dif-
fuse economies are in South Asia, 
the Philippines and Burma, as well 
as Mozambique and Zimbabwe in 
Africa. In total, eight out of thirty 
diffuse  economies  have  avoided 
civil war, a record that is better than 
for point-sourced and coffee/cocoa 
Country Conﬂict inci-
dence in years 
1960 - 2000
Most frequent 
regime type 
(Polity score)
Annual Aver-
age per capita 
income growth 
rate 1965 
- 1999
Economic 
typology
Burma (Myan-
mar)
177 1 1.5% Diffuse, Point
India 104 3 2.4% Manufacturing
Ethiopia 81 1 -0.3% Coffee/Cocoa
Philippines 59 1;2;3 0.9% Diffuse, Manu-
facturing
Iraq 57 1 -3.5% Point
Angola 43 1 -2.1% Point
Iran 41 1;2 -1.0% Point
Algeria 37 1;2 1.0% Point
Chad 36 1 -0.6% Point
Colombia 35 3 2.1% Coffee/Cocoa
Indonesia 32 1 4.8% Point, Manu-
facturing
Guatemala 31 1;2 0.7% Coffee/Cocoa
Sudan 31 1;2;3 0.5% Diffuse, Point
South Africa 31 2 0% Point
Mozambique 27 1 1.3% Diffuse
Uganda 23 1;2 2.5% Coffee, Cocoa
Sri Lanka 22 3 3.0% Diffuse, Manu-
facturing
POLICY BRIEFING 1 MARCH 2008
Table 1: Conﬂict years, Growth, Polity and Economic Typology
Source: Murshed 2006 Table 4
based  economies.  Manufacturing 
exporters are least likely to expe-
rience outright civil war. Perhaps, 
this is because they have the best 
growth rates and institutional qual-
ity. They are also more diversiﬁed 
economies,  and  are  able  to  with-
stand the commodity price and na-
tional income ﬂuctuations that make 
growth failure more likely. Growth 
also needs to be pro-poor, which ul-
timately  means  less  inequality,  so 
as to minimise the effects of group 
inequalities and polarisation.
(b) It is discernable that India, Sri 
Lanka and Colombia are the stable 
democracies  in  the  post  1960  era 
that have had civil wars, including 
high intensity conﬂict. Many of the 
transitions in regime type from au-
tocracy  to  anocracy  to  democracy 
(during 1960-2000) are described in 
Murshed (2006). Multiple switches 
in all directions are possible, and not 
just from autocracy to democracy. 
Nevertheless, only 5 out of the sev-
enteen nations with a high conﬂict 
incidence have ever been democra-
cies with a democracy score over 4. 
Democracy, even stable democracy, 
does not guarantee the absence of 
armed  conﬂict,  both  of  the  seces-
sionist  and  rebel  varieties,  as  the 
examples  of  India,  Colombia,  Sri 
Lanka,  the  Philippines  and  others 
indicate. Autocracies also fall into 
conﬂict; nevertheless, stable autoc-
racies such as China and Singapore 
have avoided civil war, as did Tai-
wan  and  South  Korea  which  be-
came democracies recently. Despite 
prominent outliers such as  India, 
Colombia, and Saudi Arabia, most 
conﬂict prone countries are neither 
stable democracies nor autocracies,POLICY BRIEFING 1 MARCH 2008
lending support to the ﬁnding that 
conﬂict risk is greatest when regime 
types are in transition, say from au-
tocracy to democracy.  
Conclusion
Problems associated with the demo-
cratic transition, the degeneration of 
redistributive  mechanisms  and  the 
lack  of  economic  growth  contrib-
ute to long-term conﬂict risk. Their 
short-term  manifestations  take  the 
form of the inability to cope with 
economic  shocks  (associated  with 
falling export prices or natural ca-
lamities), or violent political insta-
bility. Either way, there are plenty of 
indicators of both for observers and 
policy makers to see; in many cas-
es they will beneﬁt from exchang-
ing  information.  Decision  makers 
in developed countries like the EU 
then  need  to  decide  when,  where 
and  how  to  intervene---the  extent 
of their reaction is something that is 
ultimately related to their own po-
litical incentives and imperatives.   
Endnotes
1. These scores range from -10 to 0 for au-
tocracy, and 0 to 10 for democracies, mak-
ing -10 the greatest autocracy score, and 10 
the highest democracy score; see Murshed 
(2006) for further details.
2. This is based on a countryʼs principal ex-
ports, which are described as point (mineral 
or fuel), coffee-cocoa, diffuse (other agri-
cultural) or manufacturing, where arguably 
dependence on mineral or fuel exports ex-
ante enhances the risk of conﬂict.
Credits
This  Policy  Brieﬁng  was  written  by  S. 
Mansoob  Murshed,  Institute  of  Social 
Studies, The Hague, and University of Bir-
mingham, UK.
The views expressed in this brieﬁng are the 
authorʼs alone.
Further reading
Lipset, Seymour (1960). Political Man: The Social Bases of Politics, New 
York: Doubleday
Murshed, S. Mansoob (2006), ʻTurning Swords into Ploughshares and Lit-
tle Acorns to Tall Trees: The Conﬂict Growth Nexus and the Poverty of 
Nationsʼ, background paper for the United Nations-Department for Eco-
nomic and Social Affairsʼ World Economic Survey, 2006
http://www.un.org/esa/policy/wess
Murshed, Syed Mansoob and Zulfan Tadjoeddin (2007) ʻReappraising the 
Greed and Grievance Explanations for Conﬂictʼ, MICROCON Research 
Working Paper no 2
http://www.microconﬂict.eu/publications/RWP2_MM_ZT.pdf 
Ross, Michael L. (2003). ʻOil, Drugs and Diamonds: The Varying Role 
of Natural Resources in Civil Warsʼ in Karen Ballentine and Jake Sher-
man (eds), The Political Economy of Armed Conﬂict: Beyond Greed and 
Grievance, Boulder CO: Lynne Rienner: 47-70
MICROCON, or ʻA Micro Level Analysis of Violent Conﬂictʼ is a ﬁve-year research 
programme funded by the European Commission, which takes an innovative micro level, 
multidisciplinary approach to the study of the conﬂict cycle.
Almost one third of the worldʼs population lives in conﬂict-affected low-income coun-
tries. At a fundamental level, conﬂict originates from peopleʼs behaviour and how they 
interact with society and their environment - from its ʻmicroʼ foundations. Yet most con-
ﬂict research and policy focuses on ʻmacroʼ perspectives. MICROCON seeks to redress 
this balance.
For more information on MICROCON, please visit our website:
http://www.microconﬂict.eu
Or contact us at
MICROCON - A Micro Level Analysis of Violent Conﬂict
Institute of Development Studies
Brighton BN1 9RE, UK
Tel: +44 (0)1273 872 891
© Copyright S. Mansoob Murshed 2008
ISSN 1757-238X

Indicators of Potential Conflict

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