Continuing Conflict and International Prices of Commodities: Theory and Empirical Evidence from Sub-Saharan Africa

Raul Caruso

doi:10.1108/S1572-8323(2011)0000017006

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Contributions to Conflict Management, Peace Economics and Development

ISSN: 1572-8323
Series editor(s): Professor Manas Chatterji

Subject Area: Sociology and Public Policy

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Continuing Conflict and International Prices of Commodities: Theory and Empirical Evidence from Sub-Saharan Africa

Document Information:
Title:	Continuing Conflict and International Prices of Commodities: Theory and Empirical Evidence from Sub-Saharan Africa
Author(s):	Raul Caruso
Volume:	17 Editor(s): Raul Caruso ISBN: 978-1-78052-130-5 eISBN: 978-1-78052-131-2
Citation:	Raul Caruso (2011), Continuing Conflict and International Prices of Commodities: Theory and Empirical Evidence from Sub-Saharan Africa, in Raul Caruso (ed.) Ethnic Conflict, Civil War and Cost of Conflict (Contributions to Conflict Management, Peace Economics and Development, Volume 17), Emerald Group Publishing Limited, pp.23-49
DOI:	10.1108/S1572-8323(2011)0000017006 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	This chapter presents first a theoretical model of conflict between two agents characterised by a two-sector economy. In a contested sector, two agents struggle to appropriate the maximum possible fraction of a contestable output. In an uncontested sector, they hold secure property rights over the production of some goods. Agents split their resource endowment between ‘butter’, ‘guns’ and ‘ice-cream’. Eventually, tradable goods made of both butter and ice-cream produced by conflicting parties are sold to the rest of the world. Therefore, the opportunity cost of conflict depends also on the relative profitability of contested and uncontested production. In particular, productivity of uncontested production and profitability of contested sectors are countervailing forces. The empirical section focused on a panel of Sub-Saharan African countries for the period 1995–2006. Results are not fully conclusive. However, there is robust evidence that prices of manufactures (interpreted as the uncontested ice-cream) are negatively associated with the likelihood of a civil war. Eventually, international price of manufactures is also associated with a higher GDP per capita growth rate. The concluding remark seems to be that an increase in world prices of manufactures would make civil wars less likely.