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Diamonds are a Rebel's Best Friend

18 Pages Posted: 14 Jul 2006  

Ola Olsson

University of Gothenburg

Abstract

Many countries that produce rough diamonds have experienced a highly adverse pattern of economic development. In this article, we propose that the primary reason for the negative impact is that diamonds easily become the prize in predatory struggles between loot-seeking rebels and more or less kleptocratic governments. In weakly institutionalised countries like Angola, the Democratic Republic of Congo and Sierra Leone, this theory works well, but it does not explain the impressive growth record of diamond-rich Botswana and Namibia. For a deeper understanding of these countries success, we point at the crucial differences between kimberlite and alluvial mining and the effect of having the world-leading firm De Beers as a partner. Indeed, we argue that in countries like Angola, diamonds can never be a major vehicle for sustained growth, although the ongoing Kimberley process for eliminating conflict diamonds probably has contributed to making several African countries more stable.

Suggested Citation

Olsson, Ola, Diamonds are a Rebel's Best Friend. The World Economy, Vol. 29, No. 8, pp. 1133-1150, August 2006. Available at SSRN: https://ssrn.com/abstract=917227 or http://dx.doi.org/10.1111/j.1467-9701.2006.00809.x

Ola Olsson (Contact Author)

University of Gothenburg ( email )

Vasagatan 1
Goteborg, 405 30
Sweden

HOME PAGE: http://www.economics.gu.se/olsson

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