Economic Causes of Civil Conflict and their Implications for Policy

 1

Introduction

This chapter presents an economic perspective on the causes of civil war, based on

empirical patterns globally over the period 1965-99. During this period, the risk of civil

war has been systematically related to a few economic conditions, such as dependence

upon primary commodity exports and low national income. Conversely, and

astonishingly, objective measures of social grievance, such as inequality, a lack of

democracy, and ethnic and religious divisions, have had little systematic effect on risk. I

argue that this is because civil wars occur where rebel organizations are financially

viable. The Michigan Militia, which briefly threatened to menace peace in the USA, was

unable to grow beyond a handful of part-time volunteers, whereas the FARC in Colombia

has grown to employ around 12,000 people. The factors which account for this difference

between failure and success are to be found not in the `causesí which these two rebel

organizations claimed to espouse, but in their radically different opportunities to raise

revenue. The FARC earns around $700m per year from drugs and kidnapping, whereas

the Michigan Militia was probably broke. The central importance of the financial

viability of the rebel organization as the cause of civil war, is why civil wars are so unlike

international wars. Governments can always finance an army out of taxation and so

governments can always fight each other. The circumstances in which a rebel

organization can finance an army are quite unusual. This is why my analysis is entirely

confined to civil war: what I have to say has little or no bearing on inter-government war.

Because the results are so counter-intuitive, I start by arguing why social scientists should

be distrustful of the loud public discourse on conflict. I then turn to the evidence,

describing each of the risk factors in civil war. I then try to explain the observed pattern,

focusing on the circumstances in which rebel organizations are viable. Finally, I turn to

the policy implications. I argue that because the economic dimensions of civil war have

been largely neglected, both governments and the international community have missed

substantial opportunities for promoting peace

readmore