CONCLUSIONS

There is now a near consensus among scholars and development practitioners alike that under certain conditions oil and mineral resource rents can be harmful to institutions and economic development, hence generating the so-called natural resource curse. A growing, though relatively less compelling, evidence is also emerging on the manifestation of the curse in terms of the proneness of natural resource-dependent societies to conflicts. This paper is a contribution to this strand of the literature. Building upon recent work, we develop a theoretical model that accounts for the role of natural resource rents, as a ‘lootable’ resource in promoting conflicts, especially in divided or polarized societies. Moreover, our model explicitly accounts for the potential role of institutions, both economic and political, in stemming the tendency of opportunistic grab of such resources and hence ameliorating the vulnerability of these societies to conflicts. We test the predictions of the model in a set of random-effects probit regressions,

estimated using a panel of more than 3500 annual observations over 1970-2010, drawn from 101 countries. The results of the econometric estimation lend strong support to the main predictions of the theoretical model. We confirm that resource-dependent societies are more prone to conflicts. Moreover, though there is only weak evidence that such effect is non-monotonic, it does nevertheless suggest that within the resource-rich societies those endowed with intermediate levels of rents per capita might stand to be the more vulnerable to risks of armed civil conflict. Instead, and as the model predicts, institutions of economic openness as well as the political institutions – as accounted for by the indexes of democracy and political checks and balances-were found to be robustly and negatively associated with the hazard of civil war. However, only checks and balances appear to weaken the rents effect, which was reduced in terms of order of magnitude and degree of significance when the former is included in the regression. Though the rents effect remains significant, nevertheless, this finding suggests that, while democracy is shown to be important on its own right as a factor in containing the risk of conflicts, the other institution that underpins checks and balances in the political process might hold more promise for directly weakening the resource rents effect in promoting proneness to conflicts. Very importantly our findings confirm the standard relationship between income and the

risk of civil war, which takes added importance in our model; as it could also be interpreted as a measure of the in-appropriable human capital, which is predicted by the model to have a negative impact on the risk of conflict. However, we fail to find robust association between other traditional civil war correlates, such as foreign aid, terms of trade shocks, conflictive neighborhood, or ethnic and religious polarization. Finally, thinking ahead, this paper also suggests areas for future research at both the

theoretical and empirical levels. For example, it would be interesting to extend the current theoretical model to account for the likelihood that the impact of the resource rents on conflict is subject to a scale effects. As our estimation results suggest, in all likelihood too small rents per capita will not be consequential. However, very high resource rents might as well be a deterrent to conflict, either through the ‘Hobbesian’ effect of providing the state with substantial resources to crush any potential insurgency or through strengthening the ‘authoritarian bargain’ that proved very effective in preempting incipient conflicts in highly resource endowed societies. Moreover, it would be important to probe further into the role of social polarization and its interactions with economic shocks that tend to happen at a relatively high frequency in resource-dependent economies. This more encompassing analytical framework would naturally entail a that should test not only for the levels effects of institu-