Natural Resources: Natural Resources & Peacebuilding Processes
Since 1990, at least seventeen major violent conflicts have been driven by the exploitation of natural resources,1 nine of which occurred in Africa. Research by the Economic Agendas in Civil Wars (EACW) program has pointed to an increasing trend in the "self-financing nature of contemporary armed conflict," the strategic importance of lucrative natural resources in many conflicts and the permissive environment of liberalized international trade and commerce as issues deserving attention.2
Natural resource-related conflicts may be shaped in part both by so-called "high-value" extractive and by so-called "scarce" livelihood resources. Noteworthy examples of the influence of the former include Liberia, Angola and DR Congo, where high-value resources such as timber, diamonds and coltan have been at the center of violent conflicts. In Darfur, Nepal and in the Middle East, alternatively, the control of scarce resources such as land and water have been at play.3 Many experts say natural resources are likely to play an increasing role in conflicts as population growth, rising incomes, and climate change create or exacerbate scarcities.4 Other scholars, however, remain skepticalof such a direct connection.5
Income growth is perceived to be driven in the classical model by a combination of productivity and factor endowments, so countries rich in resources (which fall into the category of factor endowments) should generally grow faster than resource-poor countries. A minority however objected, arguing that resource dependence could lead to uneven trade relationships between rich countries that imported commodities and poor countries that exported these goods.7Since this time, and especially in the last two decades, most literature on natural resources has argued that natural resource abundance in poor countries is the cause of slow economic growth, vertical and horizontal inequalities in income, corruption and an increased risk of violent conflict.8
The concept "resource curse" was first used in 1993 by Richard Auty9 and the term was popularized by Paul Collier and his associates.10 Collier and Hoeffler's "greed vs. grievance" analysis not only finds support for economic opportunism as a driver of conflict, but also associates dependence on "raw materials" with an increased likelihood that such opportunism will flourish.11 Since its emergence, this argument has stirred controversy and criticism. Today, an estimated two thirds of the world's poorest people live in countries rich in natural resources, and in most countries, sub-soil minerals belong to the state. And yet, in many countries, there is an inverse relationship between this public resource and public welfare. As highlighted by Revenue Watch, "The links between resource wealth, poverty, conflict and corruption - the so called 'resource curse' - are well documented."12
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There is a wide body of literature on the nexus of natural resources and conflict and many ways of viewing these concepts and their linkages to conflict and peacebuilding. A recent paper by the United Nations Peacebuilding Support Office (PBSO) usefully identifies three ways that natural resources and the environment interact with conflict:
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[Back to Top] 14 Humphreys identifies even more conceivable causal mechanisms, but notes first that the correlation between natural resource dependence and the onset of conflict may be entirely spurious. That is, the causality may run in the opposite direction: war may naturally strip from the economy other industries, leaving only extractive industries behind. He goes on to posit at least six rival mechanisms that might help to explain the relationship between natural resources and war onset.
Greedy rebelsHumphreys15 distinguishes three variants of the original hypothesis: (a) rebels may benefit from captured resources; (b) if the state controls resources already, then their value increases the expected payoffs associated with capturing the state;16 c) localized resources may convince rebels that succession is possible, thereby limiting the extent to which revenues must be shared.
Greedy outsidersThis hypothesis posits that greedy third parties will have more incentive to foment and facilitate civil violence in countries with natural resource wealth at stake.17 A recent United Nations Development Programme (UNDP) Bureau of Crisis Prevention and Recovery (BCPR) report cites incitation of greedy actors as one of three possible explanations for the connection between natural resource abundance and civil war.18
GrievanceGrievance may play at least four roles in natural resource contests, according to Humphreys: (a) Growing pains: moderate natural resource dependence may create temporary inter-group inequalities during development; b) Price shocks and disparities: severe natural resource dependence may create price shocks19 that exacerbate preexisting horizontal inequalities (though such price shocks might just as plausibly exacerbate class inequalities, rather than horizontal inequalities between ascriptive ethnic groups); c) Extraction-caused marginalization: the process of resource extraction itself may adversely impact certain populations; d) Privileging distribution: the resources are simply geographically distributed in ways which privilege some groups over others (that is, they reinforce preexisting outgroup hostility, rather than creating it in the first place).20 The UNDP BCPR report groups all of these mechanisms under the single rubric of unequal distribution of resource revenues that exacerbate horizontal inequalities21. The PBSO paper argues that environmental and natural resource factors are rarely, if ever, the sole cause of conflict -ideology, ethnicity, and economic factors are all connected to violent conflict. Some research shows, however, that environmental stress and the exploitation of natural resources "can be significant drivers of conflict, increasing the severity and duration of violence and complicating its resolution."22 Where "...access to the direct use of scarce land, forest, water or wildlife resources leads to marginalization or exclusion of certain groups, they become easy targets for political manipulation." Also, easily exploited natural resources may "alter the dynamics of conflict and turn a political activity into an economic one."23
Weak statesNatural resources may weaken the state, undermining state-society relations. This may come about because taxing citizens is not crucial to financing the state and therefore citizens have less influence in demanding accountability, or conversely because the state has less incentive to create institutions for good governance.24 Such a mechanism is reminiscent of Charles Tilly's explanation for state formation through taxation in European wars.25 It also may lend itself most readily to explaining many African cases, in which the governments might most easily keep themselves in power by strengthening military capacity rather than building the institutions needed for greater legitimacy.
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Sparse networksThis hypothesis posits that natural resources, destined for export markets, do not build the sort of intricate backward and forward linkages in the economy necessary for strong social cohesion between groups. Fafchamps, for instance, notes that sparse networks induce traders to invest in fewer, trust-based connections characterized by high "sunk costs." Such networks are brittle and entry into them is costly, discouraging intergroup cooperation. Sparse networks caused by natural resource dependence may also imply monopoly/monopsony trade relations between urban centers and rural peripheries. This is because the fewer traders visit a particular village, say, those that do become price-setters.26 Over time, the drain of economic surplus to urban traders may exacerbate urban-rural disparities and sow the seeds of discontent - perhaps a fifth "grievance" mechanism.
Not specifically entertained by Humphreys, but noted either tangentially by him and/or by other scholars are three more natural resource mechanisms that might cause conflict indirectly by way of decreasing economic growth - a factor shown to be associated with conflict onset.27
Dutch diseaseThe sparse networks mechanism above is distinct from, but may be exacerbated by, the so-called "Dutch disease." The Dutch disease hypothesis holds that boom-induced natural resource revenues drive local currency appreciation and thereby handicap the international competitiveness of tradeables industries, like export manufacturing, that are more crucial to long-run economic growth, and increase the demand for non-tradeables.28 Dutch Disease thereby "forces a structural adjustment in the domestic economy as resources are diverted out of the non-resource tradable sector (represented by manufacturing) into the production of non-tradables."29 The shrinking of these sectors, manufacturing in particular, is called the "disease," although in the liberal view, "there is nothing dangerous about the decline in manufacturing if competitive conditions prevail in the economy as is usually assumed by neoclassical theory."30 In the view of many New Institutional and New Economic Geography economists, however, such competitive conditions usually do not prevail between countries due, in part, to differentials in labor force know-how. The tacit knowledge required to increase productivity does not typically flow freely like capital and, to a lesser extent, labor. Rather, it is "sticky" in space, and tends to be generated and transmitted in locations where a critical mass has already formed - most often in developed countries.31 In this view, then, Dutch disease really is a curse to be actively combated through economic policy if a low-wage "race to the bottom" is to be avoided. Since economic growth has been positively associated with reduction of civil war likelihood, it follows that "Dutch disease" might plausibly be linked to increased likelihood of civil war. In a related argument, the high salaries paid in the resource sectors attract the best human capital away from the industrial sectors, and may also lessen the urgency of investing in education more generally, damaging long-run growth.
Over-BorrowingThe presence of abundant natural resources may induce governments to borrow excessively, because they serve as collateral on loans, and because the higher exchange rate makes the loans easier to pay off. However, price fluctuations on the commodities markets may suddenly leave such heavily indebted countries without the means to service their debt, leading to further impoverishment, interest rate hikes, inflation, and possibly civil discontent and violence.32
Decline of economic innovationIn a variation on Humphreys' "sparse networks" hypothesis above, it might be hypothesized that sparser networks among existing industries (caused in turn by an over-reliance on natural resources to generate wealth) lead to less information cross-pollination and decreased likelihood for knowledge spillovers. Consequently, cities and regions become less innovative and lose competitive advantage.33 Again, this hypothesis rests on the assumption that economic decline is generally associated with increased likelihood for outbreaks of violent conflict.
Regarding conflict onset, Humphreys suggests two tentative findings: (1) countries dependent on agricultural commodities are at risk of conflict independent of "high-value" natural resources, and (2) there is stronger evidence for the weak states and grievance mechanisms than for the greedy rebels mechanisms.34 He argues that different explanations of the relationship between natural resources and conflict require different sorts of policy responses - beyond those commonly put forth, such as export diversification and cutting off rebel financing. This might include addressing the relations of international corporations with domestic governments in some cases, and in others, aid policy, fiscal policy or price stabilization policies are important.35 Tailoring the appropriate strategy to the individual circumstance requires deep analysis to determine which mechanisms are most in play. "This can be done using econometric techniques and remains an open research agenda."36
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MorphologyPhilippe Le Billon has posited a framework for understanding civil conflict type according to natural resource distribution and proximity to political centers. He makes two distinctions: (1) spatial concentration (either a resource is a "point resource" or a "diffuse resource"), and (2) spatial proximity (either a resource is near or far from the political center). Point resources are highly concentrated and do not have a significant area extent on a map. Point and proximate resources that are more easily controlled by the government are less likely to be exploited by rebels than resources that are diffuse and distant.37 From these two distinctions, Le Billon creates a matrix of civil war types (see Table 2).
Natural resources cannot be assumed intrinsically to fall into any particular category by virtue of its physical attributes alone; context is important in determining their role in conflict. For instance, kimberlite39 diamonds may represent point resources, while placer or alluvial diamonds are more geographically dispersed and can be considered diffuse resources.40 As Le Billon notes, too, "If the characteristics of a commodity influence the motives, conflicts and balance of opportunities between opposing parties, complicity between members of supposedly opposing groups, corruption, and involvement of government officials or agencies in the illegal economy, frequently blur the boundaries of these neat categories."41
DurationMost theories of war duration and resource endowments center on the self-financing nature of many civil conflicts. 45 In this way, conflict duration may be influenced by many of the mechanisms identified by Humphreys above, such that resources both incite violence in the first place, and also help to finance its continuation.46 For instance, the first greedy rebels sub-hypothesis lends itself to explaining not only war onset, but also long-running rebel movements sustained by profits from natural resource trade. Humphreys also points out that natural resources may help to finance rebellions begun for reasons unrelated to natural resource endowments in the first place. Ross, for instance, notes that resources requiring collective action (which may most easily be mobilized around group identities) often start violent conflict, while 'lootable' natural resources whose extraction and trade does not require collective action tend to fuel an already-started violent conflict.47 Nicholai Lidow offers a helpful explanation for why this might be so, arguing that "top-down" resources (resources whose revenues come to a rebel leader first, who then distributes payoffs to subordinates) make for more cohesive, accountable rebel organizations, while "bottom-up" resources (resources collected by subordinates and then forwarded to leaders) make it costly for rebel leaders to enforce their will.48 Hence, groups may lose their capacity for collective action (like secession), but may continue prosecuting war.
Different natural resources may also have different effects on the duration and intensity of war. Ross asserts that lootable resources, such as diamonds, are likely to protract nonseparatist conflicts, and more obstructable resources, such as oil are likely to increase the duration and intensity of conflict.49 Similarly, Humphreys suggests that "high value" (read: "lootable") natural resource wars are likelier to end quickly and with a military victory rather than a negotiated settlement, possibly because the necessary resources to prosecute the war have been exhausted on one side.50
[Back to Top] 51 When managed well, natural resources can play an important and positive role in enhancing economic recovery, growth, and even the building of peace. Positive examples include Botswana, Namibia, Chile, Brunei, and Gabon.52 However, as noted above in the "weak states mechanism" for civil war onset, natural resources are often linked to poor governance. This can be due to lack of will or capacity on the part of the state to provide essential services, including security, to its population.53Thus, making arrangements to help facilitate the good governance of natural resources is a critical element of laying the foundation for post-conflict recovery. Such arrangements may include addressing natural resource revenue-sharing plans in peace agreements, and formalizing natural resource-based black markets.
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1. United Nations Peacebuilding Commission (UNPBC), "Environment, Conflict and Peacebuilding," (concept note, New York: Peacebuilding Commission, May 8, 2008).
2. Karen Ballentine, "Program on Economic Agendas in Civil Wars: Principal Research Findings and Policy Recommendations," (New York: International Peace Academy, April 2004), 3.
3. United Nations Peacebuilding Commission,UNPBC "Environment, Conflict and Peacebuilding," (concept note, New York: Peacebuilding Commission, May 8, 2008).
5. N. P. Gleditsch and H. Urdal, "Ecoviolence? Links Between Population Growth, Environmental Scarcity and Violent Conflict in Thomas Homer-Dixon's Work," Journal of International Affairs 56:1 (2002): 283-302.
6. Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States, (Los Angeles: University of California Press, 1997); Paul Collier, Anke Hoeffler and Nicholas Sambanis, "The Collier-Hoeffler Model of Civil War Onset and the Case Study Project Research Design," in Understanding Civil War, eds. Paul Collier and Nicholas Sambanis (Washington, D.C.: World Bank Publications, 2005); United States Agency for International Development (USAID), "Minerals and Conflict: A Toolkit for Intervention," (USAID, 2005); Karen Ballentine, "Program on Economic Agendas in Civil Wars: Principal Research Findings and Policy Recommendations," (New York: International Peace Academy, April 2004), 1.
7. Hans Singer, "The Distribution of Gains Between Investing and Borrowing Countries," American Economic Review, vol. 40, no. 2, (1950): 473-485; Raul Prebisch, "Commercial Policy in the Underdeveloped Countries," American Economic Review 49 (1959): 257-269.
8. Aderoju Oyefusi, "Natural Resource Abundance and Development: Is There a Paradigm Shift?" Journal of Business and Public Policy, Volume 1, Number 3 (Summer 2007): 2.
9. Richard M. Auty, Sustaining Development in Mineral Economies: The Resource Curse Thesis, (London: Routledge, 2003).
10. Ian Bannon and Paul Collier, (eds.) Natural Resources and Violent Conflict: Actions and Options, (Washington DC: World Bank, 2003); Paul Collier et al., Breaking the Conflict Trap: Civil War and Development Policy (Washington DC: World Bank, 2003).
11. Paul Collier, Anke Hoeffler and Nicholas Sambanis, "The Collier-Hoeffler Model of Civil War Onset and the Case Study Project Research Design," 6.
12. Revenue Watch Institute (RWI), "Our Work/Issues: Revenue Transparency" Revenue Watch Institute.
13. United Nations Peacebuilding Support Office (PBSO), "From Conflict to Peacebuilding: The Role of Natural Resources and Environment," (briefing paper prepared by PBSO in cooperation with UNEP, New York: May 2008), 2.
14. Collier et al., Breaking the Conflict Trap: Civil War and Development Policy, 126.
15. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534-5.
16. James Fearon and David Laitin, "Ethnicity, Insurgency, and Civil War," American Political Science Review 97, no. 1 (2003): 75-90.
17. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534-5.
18. United Nations Development Programme (UNDP), "Post-Conflict Economic Recovery: Enabling Local Ingenuity: Crisis Prevention and Recovery Report," (New York: UNDP Bureau for Crisis Prevention and Recovery, 2008), 44.
19. These price movements, according to Collier, "are typically generated by shocks in supply or demand that result in temporary 'stockouts:' periods in which global stocks of the commodity fall below some accepted threshold. During stockouts prices spike, followed by long periods of gentle decline. This produces a pattern of prices in which the normal state is for prices to be mildly depressed, interspersed by a few periods of exceptionally high prices." If past behavior is repeated however, the post-2000 economic boom will likely have strong adverse long-term effects, illustrating in particular the misleading gains in Africa. See Paul Collier and Benedikt Goderis, "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," (Oxford: University of Oxford, Department of Economics, 2007), 3.
20. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534-5.
21. UNDP, Post-Conflict Economic Recovery: Enabling Local Ingenuity, Crisis Prevention and Recovery Report, 44.
23. Ibid., 1.
24. Terry Lynn Karl, The Paradox of Plenty (California: University of California Press, 1997).
25. Charles Tilly, Coercion, Capital, and European States, (Cambridge: Basil Blackwell, 1992).
26. Marcel Fafchamps, "Networks, Communities and Markets in Sub-Saharan Africa: Implications for Firm Growth and Investment," Journal of African Economies 10 (2001): 109-142.
27. Paul Collier, "Economic Causes of Civil Conflict and their Implications for Policy," in Managing Global Chaos, ed. Chester A. Crocker (Washington, D.C.: United States Institute of Peace, 2000).
28. W.M. Corden and J.P. Neary, "Booming Sector and De-industrialization in a Small Open Economy," The Economic Journal 92 (December 1982): 285-848.
30. Argentino Pessoa, "Natural Resources and Institutions: The 'Natural Resources Curse' Revisited" (paper no. 8640, Munich Personal RePEc Archive, May 5, 2008), 5.
31. Paul Krugman, "Increasing Returns and Economic Geography," The Journal of Political Economy 99, no. 3 (1991).
32. Alice Amsden, Escape from Empire: The Developing World's Journey Through Heaven and Hell, (Cambridge, MA: MIT Press, 2007), chapter 8.
33. Michael Porter, "Regions and the New Economics of Competition," in Global City-Regions, ed. Allen J. Scott (New York: Oxford University Press, 2001), 139-157.
34. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534-5.
35. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534.
36. Humphreys, "Economics and Violent Conflict," 8-9.
37. Philippe Le Billon, ed., "The Geopolitics of Resource Wars: Resource Dependence, Governance and Violence," (New York: Routledge, 2005), 15.
38. Adapted from Le Billon, ed., The Geopolitics of Resource Wars.
39. Kimberlite are the most important source of gem quality diamonds. Placer diamonds are more difficult to mine and their extraction often entails considerable environmental damage.
40. Pivi Lujala, "Classification of Natural Resources."" (Paper prepared for presentation at the 2003 ECPR Joint Session of Workshops, Edinburgh, UK), 28.3.
41. Le Billon, ed., The Geopolitics of Resource Wars, 15.
42. Michael Ross, "What do We Know about Natural Resources and Civil War?" Journal of Peace Research 41, no. 3 (2004): 337-356.
43. Michael L. Ross, "Oil, Drugs, and Diamonds: The Varying Roles of Natural Resources in Civil War," in Karen Ballentine and Jake Sherman, eds., The Political Economy of Armed Conflict: Beyond Greed and Grievance. Boulder: Lynne Rienner, 2003, 63.
44. Nicholai Lidow, "Lootable Natural Resources and Rebel Group Organization" (Manuscript, 2008).
45. Tony Addison and S Mansoob Murshed, "Explaining Violent Conflict: Going Beyond Greed Versus Grievance," Special Issue of International Development, 15, no. 4.
46. David Keen, "The Economic Functions of Violence in Civil Wars" (Adelphi Papers, Routledge, 1998).
47. Ross. "What do We Know about Natural Resources and Civil War?" 337-356.
48. Nicholai Lidow, "Resources and Rebel Organization: A Comparative Study of Armed Groups in Ituri," (paper prepared for the Midwest Political Science Association Conference, Chicago, IL, April 2-5, 2009).
49. Lidow, "Resources and Rebel Organizations," 62-63.
50. Humphreys, "Natural Resources, Conflict, and Conflict Resolution," 534-5.
51. (PBSO), "From Conflict to Peacebuilding: The Role of Natural Resources and Environment."
52. USAID, "Minerals and Conflict: A Toolkit for Intervention," 2-3.
53. Kaysie Brown., "War Economies and Post-Conflict Peacebuilding.," Journal of Peacebuilding and Development, 2, no. 1 (2006): 8. (Fearon and Laitin 2003: 75-90; Herbst 2001)
54. Dani Rodrik, In Search of Prosperity: Analytic Narratives on Economic Growth, ( Princeton: Princeton University Press, 2003).
55. Hans Singer, "The Distribution of Gains Between Investing and Borrowing Countries," American Economic Review 40, no. 2, (1950): 473-485.
56. Prebisch, "Commercial Policy in the Underdeveloped Countries," 257-269.
57. Aderoju Oyefusi, "Natural Resource Abundance and Development: Is There a Paradigm Shift?" Journal of Business and Public Policy 1, no 3 (2007).
58. David Kennedy, "The 'Rule of Law,' Political Choices, and Development Common Sense," in David M. Trubek and Alvaro Santos (eds.), The New Law and Economic Development: A Critical Appraisal (Cambridge: Cambridge University Press, 2006), 95-173.
59. Alice Amsden, The Rise of the Rest: Challenges to the West from Late Industrializing Economies, (New York: Oxford University Press), 2001., Chapter 8.
60. Kennedy, "The 'Rule of Law.'"