ECONOMIC CAUSES OF CONFLICTS

There is a broad consensus that poverty constitutes the leading risk factor for conflicts, especially for civil wars (Flanigan and Fogelman, 1971; Fearon and Laitin, 2003; Collier and Hoeffler, 2004).² But whose poverty matters, and why, remain debated.

Since the end of the Second World War, most deadly conflicts have been fought in low-income countries, especially in the form of civil wars. Based on conflict statistics between 1946 and 1999, moving from a GDP per capita of $250 to $600 reduces the risk of conflict for a country from 15% to 7% (Humphreys and Varshney, 2003). Above $5000, the risk is reduced to less than 1%. This is not to say that rich countries are not involved in conflicts. In fact, France, Great Britain and the USA are among the ‘top ten' countries most frequently at war since 1946. Unlike poor countries, however, conflict rarely occurs on their territory. Transnational terrorism provides a major exception to this pattern, but this case seems mostly limited to countries more directly involved in military interventions abroad. Overall, higher levels of economic developments of a country reduce the number of terrorist incidents inside it and its trading partners (Li and Schaub, 2004). In contrast, lower levels of economic development in terrorists’ home country, and poverty among terrorists, are not significantly related to terrorism (Kruger and Maleckova, 2003; Abadie, 2004; Testas, 2004; Piazza, 2006). At a country level, wealth reduces the likelihood of conflict at home but is no guarantee for peace, especially among major powers with a history of overseas military intervention. This leads to several major questions: how do wealth and poverty relate to conflict? What is the relative importance of income levels, variations in growth rates and income inequalities within and between countries?

Two major complementary paradigms relate wealth or poverty to conflict.

The first is that wealth represents the outcome of relations between production and exchange activities over predation and conflict ones (Hirshleifer, 2001). Low-income countries are trapped in poverty because predatory activities overwhelm productive ones. Not only are predatory activities costly for production, but wealth accumulated through predation rarely ends up staying in poor countries. Violent technologies of predation, unequal distribution of productive resources at the interpersonal level, and individual rather than collective modes of protection against predation, also increase the ratio of predation to production and its social costs (Grossman, 1998). Poverty could be interpreted as a coping mechanism to avoid predation and conflict (Colson, 1974). As discussed below, the structure of the economy may aggravate this pattern and lock resource dependent countries into a poverty and conflict trap. The second paradigm is that poverty reflects the absence of institutions capable of promoting the accumulation of wealth through ‘controlled’ violence. Much of the literature stresses the importance of institutions for economic performances (North, 1991, Acemoglu et al., 2001), most notably institutions protecting private property. If critics recognize in the violence of private property rights a tool of dispossession (Blomley, 2003), others see it as a necessary ingredient of prosperity (Bates, 2001; Bates et al., 2002). What matters, from a conflict perspective, is the capacity of institutions to avoid an escalation of violence, one which would qualify violence as ‘armed conflict’.³

Whose poverty matters is closely related to inequality, itself interpreted as a main cause of rebellion since at least the Enlightenment and revolutions of the late 18th century (Tocqueville, 2000 [1835]). Karl Marx expanded on the impact of inequalities on the rebellion of the industrial working class, which he associated with market crises (Boswell and Dixon, 1993).

Dependency theorists, among others, linked modernization and more recently globalization with increased inequalities causing conflicts (Hobsbawm, 1959; Wolfe, 1969; Galtung, 1971; Russell, 1974; Paige, 1975; Muller, 1985). Ted Robert Gurr’s concept of relative deprivation linking economic disparities and political violence initiated a systematic analysis of the role of inequality in conflicts (Gurr, 1970). Much of the early qualitative and quantitative studies of inequalities and conflicts supported the relative deprivation arguments (Russett, 1964; Muller and Seligson, 1989; Timberlake and Williams, 1987; Boswell and Dixon, 1990). The limits of these studies were exposed by Lichbach (1989), and later studies using new data sets found no significant cross-national relationship between inequality and war onset (Fearon and Laitin, 2003; Collier and Hoeffler, 2004).

At the core of the inequality and conflict debate lie definitions of inequalities and their application to individuals or groups. Among economists, Sen (1992) has expanded the realm of inequalities from economic assets to welfare, rights and liberties. Drawing from a major study on the social and economic causes of Complex Humanitarian Emergencies, Frances Stewart (1998: 1) identified horizontal inequalities (between social groups as opposed to vertical inequality between individuals within society) as ‘the fundamental source of organized conflict'. Empirical testing supported the ‘horizontal inequality' argument in the case of Nepal for conflict intensity (Murshed and Gates, 2005), and for cross-national panels for social polarization and horizontal social inequality, but not interindividual inequalities and combined ethnic and socio-economic polarization for conflict onset (0stby, 2008). Several studies have also indirectly informed the debate on inequality and conflicts. One is that forced recruitment appears as common practice within many contemporary conflicts, as found in the case of Sierra Leone (Humphreys and Weinstein, 2006), and that inequalities understood in terms of motivation for conflict onset and intensity may be misplaced. Rather, inequalities would be reflected in the likelihood of forcedrecruitment.Another, deriving from the study of inequalities and crime in Colombia, suggest that criminal activities are mostly conducted by people from households with per capita income below 80% of the mean (Bourguignon et al., 2003).

This suggests that inequality among the poorest may matter more than inequality within the upper and middle classes.

Building on his findings linking resource dependence to conflict onset, Collier (2000) later stressed that economic opportunity (rather than greed as a motivational factor) is a major factor in the escalation of violence. His findings were supported by analyses emphasizing the economic benefits derived from conflicts (Keen, 1998), although not in terms of initial funding of rebellions by resources (Ross, 2004a). Beyond the feasibility argument of rebellion, Weinstein (2007) also demonstrated the negative impacts that economic opportunities independent of local population support had on the organization and behaviour of rebel groups.

If poverty is associated with armed conflicts, economic growth should be the solution. At the aggregate level, unprecedented economic growth in the 20th century did not prevent it from being the most deadly in history. There is good evidence, however, to show that growth reduces the risk of conflict, but can indirectly create greater vulnerability to conflict due to negative economic shocks. Major interstate conflicts, such as the Second World War, often took place following protracted economic recessions.⁴ Low rates of economic growth are also robustly correlated with civil war onsets (Fearon and Laitin, 2003; Collier and Hoeffler, 2004; Hegre and Sambanis, 2006). The direction of the relationship between growth collapse and conflicts is difficult to determine, however, since they can mutually influence each other. Measures of rainfall variation as an instrumental variable for economic growth in 41 African countries between 1981 and 1999 suggest that growth collapse increases the risk of conflict (Miguel et al., 2004). Findings also suggest that the impact of growth shocks is not mitigated by higher income levels, stronger democracy or higher ethnic diversity.

The mode of economic development, through which growth is achieved, is also important.

The liberal peace theory, drawing from Montesquieu (1949 [1759]) and Kant (1939 [1795]), argues that commerce is pacifying and economically interdependent countries would be less likely to go to war (Angell, 1911). The two world wars cast much doubt about this argument (Carr, 1940; Morgenthau, 1948). Most statistical studies have since confirmed that trade reduces the risk of conflict onset (Polachek, 1980; Oneal and Russett, 1999).⁵ Yet, the probability of conflict increases when increases in trade unilaterally increase the dependence of the smaller economy in the dyad (Russet and Oneal, 2001). Furthermore, not all traded goods achieve a similar dampening effect. This effect could work through the different effects of economic trade sectors on poverty and inequality, with agricultural goods promoting higher levels of poverty and inequality than manufactured goods (Gissinger and Gleditsch, 1999). More generally, trade in primary commodities more easily appropriable by force have a weaker dampening effect on conflict risk than most manufactured goods (Dorussen, 2006). If trade reduces inequalities, foreign direct investment (FDI) increases them (Gissinger and Gleditsch, 1999). Critics of the argument that trade between two countries promotes peace also point out that whereas trade ties help to achieve negotiated settlements to conflicts, this does not spare them from being more likely to experience wars (Barbieri, 2002). Whereas those who are heavily trade dependent may be less likely to engage in conflicts, economically strong states in the system are more likely to do so.

Studies of the economic causes of conflicts have reached a consensus that war is more likely in poorer countries, and that the incidence of wars among the poorest countries results from a two-way causality. First, the high costs of conflict increase poverty. This is particularly true if hostilities are taking place on their territory. In the case of interstate wars, poorer countries are more likely to bear the brunt of hostilities than their richer opponent.

Since conflicts are often chronic, over time, conflict-affected countries become poorer. Countries spared by conflicts on the contrary should see their income level increase, at least with respect to the conflict factor. Second, poverty weakens the capacity of the state to resolve conflict and curtail an escalation of violence. Poverty alone and in itself, however, does not provide an explanation for conflicts. Poverty is correlated with other factors affecting the likelihood of conflict, such as low levels of education, the absence of a middle class, and weak democracies, factors which have been associated with higher risks of conflict onset. The impacts of inequality and patterns of economic growth are also important to take into account (Nafziger and Auvinen, 2002). These have been better addressed through clearer definitions, improved methodologies, and broader linkages with other sources of conflicts. The importance of chronic versus transient poverty (Goodhand, 2003), horizontal versus vertical inequalities (Stewart, 1998) and government policies and economic structure are now better understood. No single narrative can reflect the individual circumstances of a conflict, but a general pattern for economic causes of conflicts include poor countries facing growth collapse in the context of group-based inequalities. As discussed in the following section, resources may be prone to set such a context, and to provide means, motivations and rewards for conflicts.

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Source: Bercovitch Jacob, Kremenyuk Victor, Zartman I. William (eds).. The SAGE Handbook of Conflict Resolution. SAGE Publications,2009. — 704 p.. 2009

ECONOMIC CAUSES OF CONFLICTS

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