Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207278 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7887
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We provide evidence about the mechanisms linking resource-related income shocks to conflict. Combining temporal variation in international drug prices with spatial variation in the suitability to produce opium, we show that higher drug prices reduce conflict over the 2002-2014 period in Afghanistan. There are two main mechanisms. First, household living standards and thus the opportunity costs of fighting increase. Second, we hypothesize that the opportunity cost effects dominate contest effects if the degree of group competition over valuable resources is sufficiently small. Regressions using georeferenced data on drug production, ethnic homelands, and Taliban versus pro-government influence support this hypothesis.
Subjects: 
resources
resource curse
conflict
drugs
illicit economy
illegality
geography of conflict
Afghanistan
Taliban
JEL: 
D74
K40
O53
Q10
Document Type: 
Working Paper
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