Labor Intensive Resources and Conflict

by Greg Sanders Flickr photo by mafic used under a Creative Commons license.  While participants won’t often say so, civil conflict is often driven by profit motives rather than any larger ideals.  Control of a country’s key resources is often either a direct goal of warring parties or a secondary goal that gives them the income to pursue their main interests.  So what happens when prices of a country’s export rise on the world market?  Does the increased profitability mean wars will be fought more viciously and with better funding?  Alternately, does the chance to make a decent income through conventional work calm things down? Slate has an article on just that question, prompted by a new paper by economists Oeindrila Dube and Juan Vargas.  The answer seems to depend on how labor intensive the good is.  The paper specifically studied Colombia and found that goods which provide a lot of jobs, like raising coffee beans, tend to diminish conflict when prices go up.  “The researchers estimate that an additional 500 deaths may have resulted from the increased conflict that came from lower coffee prices.” By comparison, capital intensive goods which provide high paying jobs but in limited numbers, such as oil, tend to drive conflict when prices rise. One caveat, the article mentions diamonds as a capital intensive resource.  However, my understanding is that in Sierra Leone the diamond mining process is non-mechanized.  Similarly, if I am reading the article correctly, illegal drugs were treaded as a potential confounding variable, rather than an asset which also has a variable price on the world (black) market.  A next step might be to better study labor-intensive resources that have artificially high prices, due to illegality in the case of drugs or supply controls that OPEC can only dream of in the case of diamonds. Hat Tip: Dani Rodrik