Wednesday, February 06, 2008

Poverty doesn't cause civil wars, a weak defence of property rights does

Facinating paper (PDF) out from the World Bank today. Here's the abstract:

"Abstract The dominant hypothesis in the literature that studies conflict is that poverty is the main cause of civil wars. We instead analyze the effect of institutions on civil war, controlling for income per capita. In our set up, institutions are endogenous and colonial origins affect civil wars through their legacy on institutions. Our results indicate that institutions, proxied by the protection of property rights, rule of law and the efficiency of the legal system, are a fundamental cause of civil war. In particular, an improvement in institutions from the median value in the sample to the 75th percentile is associated with a 38 percentage points’ reduction in the incidence of civil wars. Moreover, once institutions are included as explaining civil wars, income does not have any effect on civil war, either directly or indirectly."


The implications of this are huge and it looks like the researchers have been pretty careful about putting the right controls in place. The case that a robust defence of property rights, and other liberal economic institutions, should be a priority for developing countries has always been strong thanks to the clear connection to economic growth. However, now we have good reason to think that such institutions aren't just the best route to greater prosperity but also independently prevent the tragedy of civil war.

If we want to help foreign countries encouraging the development of institutions and the defence of property rights is the way to go. Development aid and other international interventions won't encourage peace and stability if they don't come with pressure to put the right institutions in place. This report provides a powerful case for conditionality.

Given the greater effectiveness, in encouraging stability, of institutions inherited from the British Common Law tradition, a factor mentioned explicitly in the full text linked above, this report's findings even strengthen Niall Ferguson's case for the British Empire in Empire.

4 comments:

Anonymous said...

It seems obvious that without defined property rights human nature tends towards a violent free-for-all which, ultimately, is all civil war is. Wonderful study though. So refreshing to be reminded that economic freedom is a true moral good.

Meg said...

I think it's a mistake to try to pick one or the other because they're so interrelated. Yes, defense of property rights helps keep civil wars from breaking out, but extreme poverty (a) often makes people desperate enough to turn to whatever survival they can, which often involves breaking property rights-based laws, and (b) the kinds of countries that have civil wars usually have governments without enough resources to adequately enforce the laws. So more property rights would be good, but just "encouraging" it isn't enough-- countries need to have the means to uphold them and provide enough of a safety net that poverty-driven fighting isn't the only option desperate people can see.

Matthew Sinclair said...

Meg,

The authors go to considerable lengths to disentangle those effects.

Matt

Simon said...

in encouraging stability, of institutions inherited from the British Common Law tradition

Didn't stop indeed could be said to have caused the Irish civil war. IN the early 1920s