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Between a Rock and a Hard Place: A New Perspective on the Resource Curse

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  • Rabah Arezki
  • Markus Brueckner

Abstract

Military expenditure shares significantly affect the relationship between the risk of civil conflict outbreak and natural resources. We show that a significant positive correlation between the riskof civil conflict outbreak and resource rents is limited to countries with low military expenditure shares. In countries with high military expenditure shares there is no significant relationship between the risk of civil conflict outbreak and rents from natural resources. An important message is thus that a conflict resource curse is absent in countries with sufficiently large military expenditure shares. However, there is a trade-off: the larger military expenditure shares, the smaller is the effect that resource rents have on economic growth and democracy.

Suggested Citation

  • Rabah Arezki & Markus Brueckner, 2021. "Between a Rock and a Hard Place: A New Perspective on the Resource Curse," ANU Working Papers in Economics and Econometrics 2021-677, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2021-677
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