Oil and Civil Conflict: Can Public Spending have a Mitigation Effect?

Abstract

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Exiting from Fragility in Sub‐Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions

“…Interestingly, while Taydas and Peksen () find a positive but statistically insignificant association between military spending and the onset of conflict, Singh et al . () find that higher levels of military spending are significantly associated with a lower risk of conflict in oil‐rich countries. In oil‐poor countries, military spending increases the risk of conflict.…”

“…Singh et al . () show that this is all the more important in resource‐rich countries, which are more prone to conflict. Taydas and Peksen (), following Azam (), Azam and Mesnard () and Bueno De Mesquita et al .…”

“…The result on military spending seems even stronger in resource‐rich countries (Table , column 3), in contrast to the Singh et al . () study that suggested that military spending may contribute to stability in this group of countries. Health and education spending are mostly positively associated with resilience, though the coefficients on these variables are not significant (Table , columns 2 and 4).…”

“…On the expenditure side, no empirical study directly estimates the impact of expenditure amount or composition on state fragility, although, as noted in Besley and Persson (2014), the capacity of the state to provide public goods is seen as a critical pillar of development. Nonetheless, a number of papers tackle the impact of public spending on various aspects of state fragility, including conflict, poverty and inequality (Chu et al, 2000;Gupta et al, 2001Gupta et al, , 2003Burgoon, 2006;Thyne, 2006;Collier and Hoeffler, 2007;Taydas and Peksen, 2012;IMF, 2014a;Singh et al, 2014). As for tax revenue, findings suggest that the impact of some categories of spending varies depending on whether countries are resource-rich or not, highlighting the importance of controlling for this factor in empirical investigations.…”

“…2 More specifically, effective tax collection institutions can spur demand for democracy and more inclusive institutions, as tax payers expect an improved delivery of public services and demand more transparency and accountability in the management of the tax revenue. A higher tax intake is critical to allow the state to deliver basic goods and services and carry out growth-enhancing investments, thus contributing to building resilience by reducing poverty, inequality and the likelihood of conflict (Chu et al, 2000;Gupta et al, 2001Gupta et al, , 2003Burgoon, 2006;Collier and Hoeffler, 2007;Taydas and Peksen, 2012; International Monetary Fund (IMF), 2014a; Singh et al, 2014).…”