Abstract: Natural resources have been blamed for inducing slow growth and sparking civil conflicts and violence. This paper first develops a model to account for the hazard of armed civil conflicts as a manifestation of the natural resource curse, which is mediated by the quality of both economic and political institutions. We then use recently published data on institutional quality and natural resource rents to measure the potential impact of the resource curse on violent civil conflicts using a panel of data for over 100 countries in the period 1970–2010. Our model explicitly accounts for the role of good economic and political institutions in deterring the recourse to violence as well as the extent to which they might weaken the resource rents effect.
Keywords: Oil and natural resource curse, Armed civil conflict, Economic growth, Democracy, Political checks and balances
JEL Codes, Q34, Q38, E02