Stimulant or Depressant?: Resource-Related Income Shocks and Conflict

Households in Conflict Network (HiCN) Working Paper No. 286

124 Pages Posted: 16 Aug 2018 Last revised: 26 May 2020

See all articles by Kai Gehring

Kai Gehring

University of Zurich - Chair of Political Economy; Heidelberg University; CESifo

Sarah Langlotz

Goettingen University

Kienberger Stefan

Salzburg University

Multiple version iconThere are 2 versions of this paper

Date Written: May 13, 2020

Abstract

We provide evidence on the mechanisms linking resource-related income shocks to conflict, focusing specifically on illegal crops. We hypothesize that the degree of group competition over
resources and the extent of law enforcement explain whether opportunity cos or contest effects
dominate. Combining temporal variation in international drug prices with spatial variation in the
suitability to produce opium, we show that in Afghanistan higher prices increase household living
standards, and reduce conflict. Using georeferenced data on the drug production network and Taliban versus pro-government control highlights the importance of opportunity cost effects, and reveals heterogeneous effects in line with our theory.

Keywords: Resources, Resource Curse, Conflict, Drugs, Illicit Economy, Illegality, Geography of Conflict, Afghanistan, Taliban

JEL Classification: D74, K4, O53, Q1

Suggested Citation

Gehring, Kai and Langlotz, Sarah and Stefan, Kienberger, Stimulant or Depressant?: Resource-Related Income Shocks and Conflict (May 13, 2020). Households in Conflict Network (HiCN) Working Paper No. 286, Available at SSRN: https://ssrn.com/abstract=3224444

Kai Gehring (Contact Author)

University of Zurich - Chair of Political Economy ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland
+4917620916056 (Phone)

HOME PAGE: http://www.kai-gehring.net

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Sarah Langlotz

Goettingen University ( email )

Platz der Göttinger Sieben 5
Professur für Entwicklungsökonomik (Prof. Fuchs)
Goettingen, DE 37073
Germany

HOME PAGE: http://https://sites.google.com/view/sarah-langlotz/home

Kienberger Stefan

Salzburg University ( email )

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