Do Economic and Political Institutions Mitigate the Risk of Natural Resource Conflicts?

19 Pages Posted: 4 Mar 2015 Last revised: 8 Sep 2015

See all articles by Colin O'Reilly

Colin O'Reilly

Creighton University

Ryan Murphy

Southern Methodist University (SMU)

Date Written: September 7, 2015


Despite repeated attempts to model conflict as contests over rent, few researchers have found a persuasive identification strategy to test these models. However, Lei and Michaels (2014) find that exogenous discoveries of “giant” oil fields are in fact associated with increased likelihood of violent conflict. Surprisingly, they do not find any evidence that political decision rules mitigate the effect of natural resource discoveries on the instance of conflict. This paper re-estimates Lei and Michaels’ model to test if their result is dependent on the institutional environment that prevailed at the time of the oil discovery. Results indicate that for conflicts over control of territory, strong economic and political institutions reduce the likelihood of conflict in the wake of the discovery of oil. This empirical finding is consistent with basic theoretical models of violent conflict.

Keywords: Conflict, Civil War, Oil, Natural Resources, Institutions, Conflict Resolution

JEL Classification: Q34, O4, P48, D74

Suggested Citation

O'Reilly, Colin and Murphy, Ryan, Do Economic and Political Institutions Mitigate the Risk of Natural Resource Conflicts? (September 7, 2015). Available at SSRN: or

Colin O'Reilly (Contact Author)

Creighton University ( email )

2500 California St.
Omaha, NE 68178
United States

Ryan Murphy

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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