Ideas to Action:

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December 1, 2011

Economic Shocks and Conflict: The (Absence of?) Evidence from Commodity Prices - Working Paper 274

One of the most influential ideas in the study of political instability is that income shocks provoke conflict. “State prize” theories argue that higher revenues increase incentives to capture the state.“Opportunity cost” theories argue that higher prices decrease individual incen-tives to revolt. Both mechanisms are central to leading models of state development and collapse. But are they wellfounded? We examine the effects of exogenous commodity price shocks on conflict and coups, and find little evidence in favor of either theory. Evidence runs especially against the state as prize. We do find weak evidence that the intensity of fighting falls as prices rise—results more consistent with the idea that revenues augment state capacity, not prize-seeking or opportunity cost. Nevertheless,the evidence for any of these income-conflict mecha-nisms is weak at best. We argue that errors and publication bias have likely distorted the theoret-ical and empirical literature on political instability.

Samuel Bazzi and Chris Blattman
July 22, 2011

Constraints to Domestic Enterprise Financing in Post-Conflict Liberia - Working Paper 260

This paper examines the efficacy of loan programs in the development of domestic enterprises in the immediate aftermath of conflicts. The author explores whether the strategies employed by such programs are effective and if there are opportunities for improving the outcomes of similar projects in post-conflict environments.

John Gorlorwulu
March 2, 2011

Failed States, Vicious Cycles, and a Proposal - Working Paper 243

Failed states often suffer the repeated return to power of former warlords who weaken institutions and make people poorer. In this working paper, Rajan argues that the only way to break the cycle of dictators is to empower the citizenry through economic growth. In the case of failed states, he proposes a unique solution to allow the electorate to choose an impartial foreigner to govern the country and lay the foundations for good governance and sustainable economic progress.

Raghuram G. Rajan
August 10, 2010

How Should Oil Exporters Spend Their Rents? - Working Paper 221

This paper argues for approaches that increase public understanding of the need for prudent spending of oil revenues in booms, and for comprehensive consideration of a range of options for using rents. Drawing on the experience of a few successful countries, it points to a number of common factors that seem to be important in enabling countries to obtain a positive payoff from resource wealth. These include a strong concern for social stability and growth, a capable and engaged technocracy, and interests in the non-oil sectors able to act as agents of restraint.

Alan Gelb and Sina Grasmann
January 11, 2010

Peace-Building without External Assistance: Lessons from Somaliland - Working Paper 198

This paper examines how the lack of recognition of Somaliland by the international community—and the consequent ineligibility for foreign financial assistance—has shaped the region's political development. It finds evidence that Somaliland’s ineligibility for foreign aid facilitated the development of accountable political institutions and contributed to the willingness of Somalilanders to engage constructively in the state-building process.

January 4, 2010

Bases, Bullets, and Ballots: The Effect of U.S. Military Aid on Political Conflict in Colombia - Working Paper 197

Does foreign military assistance strengthen or further weaken fragile states facing internal conflict? In a new working paper, CGD post-doctoral fellow Oeindrila Dube and co-author Suresh Naidu find that U.S. military assistance to Colombia may increase violence and decrease voter turnout, undermining the perceived value of foreign military assistance.

Suresh Naidu and Oeindrila Dube