Thiemo Fetzer, Warwick University

"Does Democracy Moderate Resource-induced Conflicts"

Abstract

Can institutionalized transfers of natural resource rents to lower levels of government be a source of civil conflict? Can democratic institutions limit the link between resource rents and civil conflict? This paper brings together these two questions by exploiting within country variation in disbursements of oil revenue to subnational governments that are located far away from the actual physical location of the natural resource. We combine novel rich micro data on these exogenously determined transfers with novel data on local democratic institutions in Nigeria to make three contributions. First, we establish the existence of a strong relationship between institutionalized resource rents and conflict. Second, we find that this conflict is highly institutionalized centering around political militias. Third, we find that elections at the local level significantly reduce the pass between positive shocks to natural resource rents and civil conflict. These findings are confirmed using detailed individual level micro-surveys.

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