On the Conflict-Poverty Nexus

31 Pages Posted: 8 Oct 2006

See all articles by S. Brock Blomberg

S. Brock Blomberg

Ursinus College

Gregory D. Hess

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Siddharth Thacker

Ziff Brothers Investments

Abstract

We develop a model to explore the inter-relationships between conflict and economic activity. We construct a simple two-period model where consumption and investment decisions are made in the presence of governments who consider initiating diversionary conflict to raise their chances of remaining in power. Economies with selfish leaders and lower gains from capital formation may fall prey to engaging in avoidable conflicts thereby lowering investment and hence future growth. Using panel data for over 152 countries from 1950 to 2000, we find evidence for conflict lowering economic growth and, after conditioning on the initial conditions of geography, private, public, and human capital investment, lower growth raising the likelihood of conflict. These results are broadly consistent with our model.

Suggested Citation

Blomberg, S. Brock and Hess, Gregory D. and Thacker, Siddharth, On the Conflict-Poverty Nexus. Economics & Politics, Vol. 18, No. 3, pp. 237-267, November 2006, Available at SSRN: https://ssrn.com/abstract=935714 or http://dx.doi.org/10.1111/j.1468-0343.2006.00170.x

S. Brock Blomberg (Contact Author)

Ursinus College ( email )

Collegeville, PA 19426-2562
United States

Gregory D. Hess

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Siddharth Thacker

Ziff Brothers Investments

55 Railroad Avenue
Greenwich, CT
United States

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