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Conflict Diamonds

Author

Listed:
  • Olsson, Ola

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract
’Conflict diamonds’ refers to the fatal role that diamonds are believed to have played in several African conflicts. The article analyzes the impact of diamond abundance on economic growth in light of the broader, previously discovered empirical finding of a ’curse of natural resources’. By extending the theory of appropriative conflict, a predator-prey game is outlined in which a rebel chooses between peaceful production and predation on natural resources controlled by the ruler. It is shown that whereas an increase in natural resources might increase the ruler’s public utility investments, it might also lead to a crowding-out in favor of defense spendings, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a ’U-shaped’ relationship with economic growth.

Suggested Citation

  • Olsson, Ola, 2003. "Conflict Diamonds," Working Papers in Economics 86, University of Gothenburg, Department of Economics, revised 30 Nov 2003.
    • Handle: RePEc:hhs:gunwpe:0086
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    File URL: http://hdl.handle.net/2077/2831
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    diamonds; appropriative conflict; curse of natural resources; growth; predation;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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