Oil and Civil Conflict : Can Public Spending Have a Mitigation Effect?
In this paper, the conditions under which the spending patterns of oil resources may mitigate the risk of violent domestic conflict are studied. Some recent research suggests that more government spending either in general or specifically in welfar...
| Main Authors: | , , |
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| Format: | Mining/Oil and Gas |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/01/20153245/oil-civil-conflict-can-public-spending-mitigation-effect http://hdl.handle.net/10986/20101 |
| Summary: | In this paper, the conditions under
which the spending patterns of oil resources may mitigate
the risk of violent domestic conflict are studied. Some
recent research suggests that more government spending
either in general or specifically in welfare and military
may reduce the risk of civil conflict onset (Hegre and
Sambanis, 2006; Basedau and Lay, 2009; Fjelde and de Soysa,
2009; Taydas and Peksen, 2012). While oil wealth has begun
to be considered in the study of civil conflict as an
important source of revenue for governments, there has not
been a systematic analysis of whether oil-rich countries can
increase public spending or alter the particular allocation
of such spending to social sectors or the military as a way
to mitigate the risk of conflict. We use time-series cross
section data (148 countries, 1960-2009) to test the
hypothesis that oil has a conditional effect on civil
conflict depending on the size of government expenditure and
the allocation of government spending. Our dependent
variable is the onset of small and large civil conflict
(Gleditch et al., 2002). The empirical estimations show that
small and large conflicts alike are less likely when large
parts of oil resources are dedicated to military spending.
Increased spending in education, health or social security
is associated with lower risk of small-scale conflict,
irrespective of the level of oil revenue. On the other hand,
higher levels of general government expenditure do not
appear to have any robust mitigating effects. The paper
proceeds as follows: Section II reviews work on natural
resources and conflict; Section III discusses the literature
on public spending and conflict; Section IV presents our
approach, derives testable hypotheses, and presents the
data; Section V describes the results; and Section VI concludes. |
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