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Natural Resources, Civil Conflicts, and Economic Growth

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  • Maxime Menuet

    (Université Côte d'Azur, CNRS, GREDEG, France)

Abstract

This paper focus on civil conflicts arising from natural resource appropriation in a growth model with rent-seeking behavior and how fiscal policy can mitigate them. Such conflicts, if destructive, make the development trajectory indeterminate. There are two self-fulfilling equilibria, including a poverty-conflict trap associated with large civil conflicts. The resource curse may emerge because of pessimistic household expectations. However, fiscal policy can help overcome the tradeoff between conflict and economic development and partially solve the conflict-based resource curse. In this regard, there is an appropriate sharing of the government budget between military spending and human capital investment that minimizes conflict incentives.

Suggested Citation

  • Maxime Menuet, 2024. "Natural Resources, Civil Conflicts, and Economic Growth," GREDEG Working Papers 2024-05, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    • Handle: RePEc:gre:wpaper:2024-05
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    More about this item

    Keywords

    natural resource; civil conflict; economic growth; rent-seeking;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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