Conflict and development

Abstract

This study has two aims: 1) to identify the causal effect of income inequality on civil conflict and 2) to find the mechanism by which deprived individuals mobilize collective violence. Applying the Heckscher-Ohlin and Stopler-Samuelson theorems, this research documents a statistically significant causal effect of inequality on conflict by exploiting exogenous time variation in inequality due to tariff changes from 1989 to 2016 and its cross-sectional variation in factor endowments across 111 countries. To identify the mobilizing effect of inequality, this study tests whether the disequalizing income changes within the group facilitate the mobilization of labor and finance for civil conflict. Using a microlevel dataset of nearly 115 million individuals from 221 ethnic groups, the analysis finds that when holding total ethnic income constant, trade-induced within-group inequality that is proxied by the unemployment rate is strongly correlated with the groups propensity to precipitate conflict. This study analyzes the causal effect of social capital on political violence in Africa. To isolate the exogenous variation of social capital, I use the mode of production of an ethnic group in the precolonial period determined by the proportion of common resources – lakes or river – of its historical homeland. As common-pool resources require collective management that can lead to the emergence of solidarity within the group, it exogenously extends the level of individual trust from the family to the extrafamilial community. Combining the value survey data covering 1,921 districts in 24 African countries from 2005 to 2018 with the data of water bodies of the ethnic homeland, this article finds the dual causal effect of local social capital on political violence – internally at peace but externally at war. Its adverse effect is more pronounced in the district exposed to heterogeneous group interactions, but is moderated in the district with a well-functioning local government council. This study evaluates the effect of the community-driven development on socio-economic changes in the conflict-affected villages of Cambodia using a sample of 60 villages and 5,170 households. We use the propensity score matching difference in difference to enhance the internal validity of imperfect randomized sampling process of the project. The program significantly improves the economic conditions: household’s monthly income and assets increase by 0.33 and 0.65 standard deviations respectively. Moreover, the project strengthens villagers’ capacity of self-governance, which increases the spirit of self-reliance by 0.51 standard deviations. However, the project decreases within-village trust, which is largely driven by the loss of the vulnerable groups’ trust in their neighbours.