Economic Shocks, Civil War and Ethnicity
44 Pages Posted: 4 Oct 2013 Last revised: 4 Mar 2015
Date Written: March 25, 2014
Using a novel cross-country panel dataset, we show that commodity terms of trade declines cause civil war in countries with intermediate ethnic diversity. The civil war effects for highly diverse or homogenous societies are negative and insignificant. Since the size of the largest ethnic group explains 96% of the variation in the ethnic diversity measure, we conjecture that a key problem may be ethnic dominance: countries where the ethnic plurality is large, but not so large it cannot be challenged, may be most vulnerable to economic shocks. The findings may help to bridge the partly distinct literatures linking ethnicity and economic factors to conflict.
Keywords: Civil war, social conflict, ethnic diversity, economic growth
JEL Classification: D74, O11, O17
Suggested Citation: Suggested Citation