Economic Shocks and Varieties of Conflict: Global Prices, Real Income and Local Violence in Africa

Abstract

Do economic shocks cause civil conflict? Evidence at the country level is ambiguous. We study the impact of plausibly exogenous shocks to world food prices on civil conflict in Africa using panel data at the level of a 0.5 degree grid cell. We find that higher prices lead to fewer civil conflict battles in cells that produce food, and more civil conflict battles in cells that consume food. We interpret this as evidence that negative income shocks cause civil conflict, as rising prices increase income for producers and decrease income for consumers in real terms. The result is consistent with a model that allows for a distinction between two varieties of conflict. In food-producing cells, higher prices reduce civil conflict battles over the control of territory (what we call "factor conflict") and increase smaller-scale conflict over the appropriation of surplus ("output conflict"). This difference arises because higher prices raise the opportunity cost of soldiering for producers, while also inducing net consumers to appropriate increasingly valuable surplus as their real wages fall. In food-consuming cells, higher prices increase both forms of conflict, as poor consumers turn to soldiering and appropriation in order to maintain a minimum consumption target. We corroborate the model's predictions on output conflict using both cell-level data on violence and looting and geocoded survey data on theft and physical assault. Ignoring distinctions between consumer and producer effects leads to attenuated estimates. Projected price changes from 2010-2050 are expected to substantially increase both forms of conflict.