Peace and War With Endogenous State Capacity

Abstract

We explore how peace or war can occur in the presence of commitment problems. These problems can be reduced by institutions of good governance or, alternatively, state capacity which (a) can be considered a collective good and (b) can be improved through investments. We show how the likelihood of a peace agreement depends on the level of state capacity and on investments in state capacity made by adversaries. In accordance with existing evidence but contrary to various theories of conflict, we find that income levels unambiguously increase the chance of peace. Among other issues, we discuss the critical role of external actors in encouraging or discouraging commitment and in developing good governance institutions.Civil wars and other internal conflicts typically take long to resolve. For instance, the median length of a civil war in the post-World War II period has been more than seven years and persistence has been high as well (Collier et al. 2003, 80). Why wars last for as long as they do is akin to asking why conflict occurs in the first place. Answers that have been proposed in the literature include incomplete or asymmetric information; indivisibilities or increasing returns on matters of contention;

Democratization and Civil War

“…This question is far from settled, however, as other studies have found that UN intervention has had no statistically significant impact on democratization (Fortna and Huang, 2012) and that intervention can prolong war (Cronin, 2010). Outsiders, either unwittingly, or because of conflicting objectives, also may undermine state capacity (McBride et al, 2011).…”

“…There is a sizeable literature on the role of UN intervention and it produces mixed conclusions on its effectiveness at either building state capacity or creating lasting peace. McBride et al (2011) suggest that outsiders can play a critical role in encouraging power sharing through investments in state capacity. Put another way, external intervention may influence democratization by allowing for the formation of credible commitments (Walter, 2001;Fortna, 2004).…”

Economic Perspectives on Peaceand Conflict

“…But, why this might be the case is not theoretically clear. One possibility is that higher levels of income are associated with better institutions and state capacity (McBride et al, 2011). Another, possibly complementary reason particularly in the case that the conflict is resource-driven has to do with the labor intensity of the production of resources over which conflict takes place.…”

Asymmetric contests with initial probabilities of winning

“…McBride et al . () study a model of conflict between two parties in which two adversaries first undertake their one‐time investments in state capacity capital, and then, after observing their levels of state capacity, the two adversaries decide how much to arm and whether to engage in conflict.…”