Primary Commodity Exports and Civil War Author(s): James D. Fearon Source: The Journal of Conflict Resolution, Vol. 49, No. 4, Paradigm in Distress? Primary Commodities and Civil War (Aug., 2005), pp. 483-507 Published by: Sage Publications, Inc. Stable URL: http://www.jstor.org/stable/30045128 . Accessed: 24/10/2013 17:09 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Sage Publications, Inc. is collaborating with JSTOR to digitize, preserve and extend access to The Journal of Conflict Resolution. http://www.jstor.org This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions PrimaryCommodityExportsand Civil War JAMES D. FEARON Departmentof Political Science StanfordUniversity Collier and Hoefflerreportedthatcountrieswith a higherpercentageof nationalincome fromprimary commodityexportshavebeen moreproneto civil war,aninterestingfindingthathasreceivedmuchattention frompolicy makersandthe media.The authorshows thatthis resultis quite fragile,even using Collierand Hoeffler'sdata.Minorchangesin the sampleframingandthe recoveryof missing dataundermineit. To the extentthatthereis anassociation,it is likely becauseoil is a majorcomponentof primarycommodityexports andsubstantialoil productiondoes associatewith civil warrisk.The authorarguesthatoil predictscivil war risknot becauseit providesan easy sourceof rebel start-upfinancebutprobablybecauseoil producershave relativelylow statecapabilitiesgiven theirlevel of percapitaincome andbecauseoil makesstateor regional control a tempting"prize."An analysis of data on governmentobservanceof contractsand investor-perceived expropriationrisk is consistentwith this hypothesis. Keywords: civil war; naturalresources;oil; rebelfinance Paul CollierandAnkeHoeffler'spaper"GreedandGrievancein CivilWar"hashada majorimpacton bothpublicdebateand social science researchon contemporarycivil wars. First posted to a World Bank Web site in early 2000,1 Collier and Hoeffler undertook a cross-national statistical analysis of civil war onset in 161 countries since 1960 and found that "the extent of primary commodity exports is the strongest single influence on the risk of conflict" (Collier and Hoeffler 2000). By way of explanation, they argue that primary commodity dependence creates better opportunities to finance rebel groups and so enables rebellion. This finding received widespread press coverage, garnering articles and editorial comment in The Economist, the New YorkTimes, the Washington Post, and the Financial Times, among many other newspapers and magazines. Indeed, the study's main 1. The earliestdraftI have is datedApril 26, 2000. Severalsubsequentversions were posted to the Bank's "Economicsof Civil War,Crime, and Violence" Web site (http://econ.worldbank.org/programs/ conflict), andthe publishedversionis CollierandHoeffler(2004). The core statisticalmodel for the "Greed andGrievance"paperis presentedin CollierandHoeffler(2002b), andthe dataused forthatarticleareavailable at Hoeffler's Web site http://users.ox.ac.uk/~ball0144/. Collier et al. (2003) reportsome of the main resultsof the "Greedand Grievance"paperalong with manyothersin book form. AUTHOR'SNOTE:I wish to thankNils PetterGleditsch,SteveKrasner,DavidLaitin,Piivi Lujala,and JamesRon fortheircomments;andPaulCollierandAnke Hoefflerfor helpfuldiscussions.The dataused in this article will be posted at http://www.stanford.edu/~jfearon/ and also at http://www.yale.edu/unsy/jcr/ jcrdata.htm/. JOURNAL OF CONFLICT RESOLUTION, Vol. 49 No. 4, August 2005 483-507 DOI: 10.1177/0022002705277544 © 2005 Sage Publications 483 This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 484 JOURNALOF CONFLICTRESOLUTION findingandthe authors'interpretationof it may be the most widely reportedresultof anycross-nationalstatisticalstudyof civil conflict,ever.2As TheNew YorkTimessummarizedthe first version of the paper,the Bank found thatthe single biggest risk factorfor the outbreakof warwas a nation'seconomic dependenceon commodities.Eagernessto profitfrom coffee, narcotics,diamondsand othergemstonesboth promptsoutbreaksof violence and determinestheirstrengthover time, says the study."Diamondsare the guerrilla'sbest friend,"said Paul Collier, the authorof the studyanddirectorof researchat the Washington-basedWorldBank'seconomics department."Civilwarsarefarmorelikely to be causedby economic opportunities thanby grievance."3 Collier andthe mediadrewmajorpolicy implicationsfromthe finding.Forexample, "To reduce the occurrenceof these wars, [Collier] suggests, countries should diversifytheireconomies and visibly channelcommodityincome into social service programs,to underminepublic supportfor rebelswho seize the mines andfarmlands. The world community,meanwhile, can help by refusing to do business with rebel groups."4In December 2002, the New YorkTimes listed policy implications of the Collier and Hoeffler paper in its "The Year in Ideas" section: "Throughout Africa and in parts of Asia and Latin America, guerrillas finance their armies through the illegal export of commodities: timber, diamonds, oil and coca. Policy makers are now trying to encourage guerrillas to give up their fight by cutting off the money spigot. An embargo, they believe, can put rebels out of business or drive them to the negotiating table."5Begun in May 2000 and endorsed by the United Nations, the Kimberley Process to end trade in "conflict diamonds" is an important policy initiative consistent with Collier and Hoeffler's argument.6 For academic research agendas, Collier and Hoeffler's work has brought the question of rebel financing to the fore, a highly valuable contribution. In the literature on "contentious politics" and social movements, the idea that the "opportunity structures" facing would-be rebels are at least as important for explaining rebellion as relative deprivation or social grievances has been common for some time (Eisinger 1973; 2. See, for examples,SathnamSanghera,"RebelsFight for Loot Not Causes,"FinancialTimes,June 16, 2000, Londoned., p. 12; John Burgess, "CivilWarsLinkedto CertainEconomies;WorldBank Cites Commodities'Role,"WashingtonPost, June 16, 2000, final ed., p. E03; JosephKahn,"WorldBankBlames Diamondsand Drugs for ManyWars,"New YorkTimesJune 16, 2000, late ed., p. A14; G. PascalZachary, "MarketForces Add Ammunitionto Civil Wars-Research Suggests Rebels Have 'Greed'as Motive;PrimaryExportsCount,"WallStreetJournal,June 12, 2000, Easterned., p. A21; MartinWolf, "HowCivil War PlaguesthePoor,"FinancialTimes,December27, 2000, Londoned., p. 13;PaulCullen,"MoneyIs Still atthe Rootof WarWorldwide,"IrishTimes,May 11,2001, p. 55; SebastianMallaby,"AJ.FK. Approachto Terrorism,"WashingtonPost,November26, 2001, finaled., p. A25; TinaRosenberg,"ToPreventConflicts,Lookto CommoditiesLike Diamonds,"New YorkTimes,July 15, 2002, late ed., p. A6; TinaRosenberg,"TheYearin Ideas;Peace throughEmbargo,"New YorkTimes,December 15, 2002, late ed., sec. 6, p. 108; "TheGlobal Menace of Local Strife-Civil Wars,"TheEconomist,May 24, 2003, U.S. ed., p. 23; and DaphneEviatar, "Howto Save Africa,"Newsweek,September22, 2003, Atlanticed., p. 44. 3. Kahn,"WorldBank Blames Diamondsand Drugs for ManyWars." 4. John Burgess, "CivilWarsLinkedto CertainEconomies." 5. TinaRosenberg,"TheYearin Ideas;Peace throughEmbargo,"citing Collier andHoeffler'sstudy directly. 6. See www.kimberleyprocess.com. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 485 McCarthyandZald 1977;Tilly 1978). But "opportunitystructures"wereneverclearly specifiedfor empiricalexaminationin the case of civil war.Collier andHoefflertook an importantstep forwardby proposingto examinerebel organizationsas businesses of a sort and to measurepossible determinantsof theirfinancialviability.7 In this article, I use the data from Collier and Hoeffler (2002b) to reassess the impactof primarycommodityexportson the probabilitythata countryhas a civil war. othercrossDespite the claims made on behalf of this proxy for rebel "opportunity," nationalstatisticalstudieshave not noteda similarlystrongrelationship.In particular, Fearonand Laitin (2003) find no supportfor an independenteffect of primarycommodityexportdependenceon civil waronset, despiteusing the same measureof commodity exportsas Collier and Hoeffler and a fairly similarlist of civil wars. What accountsfor the differentresults?Because so many things can vary across two statisticalstudies with "the same"dependentvariable-such as specifics of the sample, model specification(which variablesare includedand how), measures,and estimationmethods-it can be difficultto identifythe reasonsfor conflictingfindings. My procedureis to startby replicatingthe main regressionresults in Collier and Hoeffler(2002b). I then examinethe impactof changingminoraspectsof the sample frameand the model specification,one aspect at a time. I find that one does not have to departmuch from Collier and Hoeffler (2002b) before primarycommodity exports cease to matterin statisticalterms. Collier and Hoeffler group their data in five-year intervals,asking whethercharacteristicsof a countryat the startof the five-yearperiodpredictwhethera civil warbeganduringthe period.Since the dependentvariable,civil waronset,is measuredatleastannually,and becausethe choice of five-yearperiodsis arbitrary,thereis a strongcase for using the country-yearas the unit of observationratherthanthe country-five-year-period (for instance,Kenyain 1980 ratherthan Kenyafrom 1980 through1984). Even without suchanargument,theresultson primarycommodityexportsshouldnot dependon this choice of sampleframing.Butwhenthe dataareanalyzedin a country-yearformat,the apparentimpactof primarycommodityexportslargely evaporates. There appearto be two main reasons. First, the country-yearformat makes lag times for severalindependentvariablesmore consistentand allows more consistent treatmentof quickly renewed wars (see below). Second, the country-yearformatis less subjectto "list-wise deletion"of civil war onsets due to missing data.Although thereare seventy-ninecivil war startsin Collier and Hoeffler'scivil war list, twentyseven of these, or aboutone-third,arenot used in theiranalysisdue to missing dataon an independentvariable.WhenI reformatthe data,sixteenwarstartsreturnto the estimationsample,mainlybecause thereareless missing dataon prioreconomic growth rateswhen I use countryyearsas observations.Withthese warsin the sample,primary commodityexportsno longersignificantlyimprovethe model's abilityto predictcivil 7. The "greedversusgrievance"contrasthas also frameddiscussionat a numberof academic/policy makerconferenceson civil war,for example,the InternationalPeace Academy-sponsoredconferencethat producedBerdalandMalone(2000) andSherman(2001). The BerdalandMaloneproject,whichincludesan earlierpaperby Collier(1999), reflectsparallelbutmorecase-studybasedresearchby Keen(1998) andReno (1998), among others.See also Ballentineand Sherman(2003). This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 486 JOURNALOF CONFLICTRESOLUTION war onsets. In addition,the estimatesfor other independentvariableschange markedly. The effect of "socialfractionalization"disappears,8and the estimatedeffect for primarycommoditiesbecomes smallerand more dubious when fractionalizationor other statisticallyinsignificantvariablesare droppedfrom the model. A more systematicway of assessing the impactof list-wise deletionon Collierand Hoeffler'sestimatesis to use multipleimputation,a proceduredevelopedby Donald Rubin (1987) thatallows one to use all the informationin a data set, includingcases thathavesome missingdata.WithCollierandHoeffler'sfive-yearsampleframing,the estimatesfor primarycommodityexportsweakenconsiderablywhen multipleimputation is used. They become insignificantby conventionalstandardswhen multiple imputationis used in the country-yearframing. Anotherfinding is thatthe data do not supportthe propositionthat civil war risk increases as primarycommodity exports increase to about 35 percentof GDP and declines thereafter.CollierandHoeffleruse such a parabolicspecification,notingthat few countrieshavemorethan35 percentof GDPin primarycommodityexports,so the relationshipbetween civil war risk and commoditydependenceis mainly positive. I use nonparametricmethodsto examinewhatthe datathemselves"say"aboutthe functional form of the relationshipand find almost no supportfor an increasing-thendecreasingpattern.Rather,it looks as if primarycommodityexportsincreasecivil war risk at a decreasingrate, so that using the logarithmis betterjustified than fitting a upside-down U. This also requires fewer contortionsin the theoretical argument advancedto rationalizethe impactof primarycommodityexports.Nonetheless, the log of primarycommodity exports remains an insignificantinfluence on civil war outbreakin the country-yearmodel. Whatshouldone makeof all this?Despite the lack of a sharprelationshipbetween primarycommodityexportsandcivil waroutbreak,I believe thatthe maintheoretical claim thatCollier and Hoeffler sought to supportis most likely correct.Betterrebel fundingopportunitiesprobablydo imply a greaterriskof civil war,otherthingsequal. But thereis little reasonto expect thatprimarycommodityexportsas a percentageof GDP are a good measureof rebel financingpotential. Contraryto the implication of the World Bank's press releases summarizing "Greedand Grievance,"the WorldBank measureused by Collier and Hoeffler does not include diamondsand othergems, and of course it does not reflect drugproduction. Instead,the measureseems to pick up mainly cash crops (like coffee or wheat) and oil exports. Largeprofitsfromcash cropsor oil requirecontrolof a nationaldistributionor production system, which rebels lack.9 To profit substantiallyfrom these sources of income, rebels must turnto smaller-timeextortion,or to what Michael Ross (2004) calls "bootyfutures"(rebelsselling futureresourceexploitationrightsto foreigncompanies or states). 8. A measureof the combinationof ethnic and religiousheterogeneity,discussed below. 9. On this point, see also Snyderand Bhavnani(2005 [this issue]). This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 487 Small-timeextortion(from the rebels' perspective,taxation)of local agricultural producerscertainlydoes occur.But my own readingof the case literature,for whatit is worth,does not suggest that cash crops or oil productionare criticalfor this.10And looking at a set of thirteen"mostlikely cases,"Ross (2004) finds only one in which booty futuresin oil helped finance a rebel group's start-upcosts (Congo Republicin 1997); it seems unlikely thatthis mechanismis very common.1"There is, then, little reasonto thinkthatcash crops or oil productionaregood measuresof the availability of rebel financing. In addition,at least one theoreticalconsiderationcuts the other way: primarycommodityexportsprovidegovernmentswith a relativelyeasy source of tax revenue,which may counterbalanceor offset increasedextortionpossibilities for rebels. I arguethatan empiricallymore plausibleand internallyconsistentexplanationis thatoil exportersare more proneto civil war because they tend to have weakerstate institutionsthanothercountrieswith the same per capitaincome (Fearonand Laitin 2003). Stateswith high oil revenueshaveless incentiveto developadministrativecompetence and control throughouttheir territory.So while oil revenues help a state againstinsurgentsby providingmorefinancialresources,comparedto othercountries with the samepercapitaincomethey shouldtendto havemarkedlyless administrative and bureaucraticcapacity.Furthermore,easy riches from oil make the state a more temptingprize relativeto workingin the regulareconomy. Empirically,I show thatit is difficultto distinguishthe apparentimpactof primary commodityexportsfrom oil exportsandthatoil exportsare somewhatmore strongly relatedto civil war risk than other primarycommodity exports in the country-year framing.A similar theoreticalargumentmay apply for nonfuel primarycommodities-heavy dependenceon taxationof primarycommoditiesat the bordermay associate with weakerstate institutions,on average.Using a measureof investorperceptions of the risk of different governments'reneging on contracts, I find that oil producersareindeedseen as havingless reliablestateinstitutionsgiven theirincomes, while the effect of otherprimarycommoditiesis marginalbut in the right direction. The articleis structuredas follows. In the second section, I introducethe CollierHoefflerdataset (fromCollier and Hoeffler2002b) and its measureof primarycommodity exports,known in short as sxp. The thirdsection comparesthe results with five-yearperiodsto countryyearsandundertakesseveralotherrobustnesschecks. The fourthsection considers results when missing values are multiply imputed,and the fifth looks at the effect of controllingfor oil exportsin additionto primarycommodities in general.The sixth sectiondevelopsthe alternativehypothesismentionedabove: the (weak) relationshipbetweenprimarycommodityexportsandcivil waronset may be due to primarycommodityexportsbeing a noisy measureof low state capability given income, especially via fuel exports. A brief conclusion considers policy implications. 10.In noneof MichaelRoss' (2004) thirteen"mostlikely"cases was thereevidencethatrebel"looting" based on legal agriculturalcommoditiesor oil helped financerebel start-upcosts. 11. Fora nuancedanalysisof the effect of oil on the Republicof Congoconflict, see EnglebertandRon (2004). This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 488 JOURNALOF CONFLICTRESOLUTION SXP AND COLLIER AND HOEFFLER'S DATASET THE SAMPLE AND THE DEPENDENT VARIABLE Collier and Hoeffler (2002b) employ a data set consisting of 161 countries observedfor each of the eight five-yearperiodsbeginningin 1960-64 and ending in 1995-99. This makes for a "potentialsample"of 161 x 8 = 1,288 observations.The 161 countriesare 150 of the 152 countriesfrom the Penn WorldTables(PWT) economic database,12plus 11 additionalcountriesfor which CollierandHoefflercoded a civil warbeginningat some point in 1960 to 1999. These lattercases do not appearin the estimationsample (the cases with complete data used in the statisticalanalysis) because they lack economic data. There is some reason to worry aboutthe implicit selection rule here. Big civil wars cause states to have troublecollecting economic data, which in turnslowers the odds thatthe countrywill appearin PWT.Thus, the cases are partly selected on the dependentvariable,which will tend to bias effect estimates. The potential sample also contains 151 observationssuch as "Azerbaijan196064"--country five-yearperiodsduringwhich the "country"was not an independent state.It is difficultto imaginea good rationalefor includingsuch territoriesseparately from the states thathad sovereigntyover them at the time, and doing so raises questions aboutwhy includethese territoriesandnot others(for instance,why not California, or Chechnya?).Fortunately,the questionis largelymoot since all but 15 of these cases aredroppedfromthe estimationsampledueto missingeconomicorotherdata.13 CollierandHoefflerwish to examinethe determinantsof civil waronset and,thus, code a dependentvariablethatequals 1 if a civil war startedin the country-five-yearperiodin question.They drop from the sample country-periodsin which a civil war was ongoing,providedthatno newwarstartedin thesamefive-yearperiod. Forexample, Afghanistan1990-94 is coded as having a civil war start,due to the post-Soviet warfor Kabulthatbeganin 1992. If, however,this warhad not occurred,Collier and Hoeffler would have coded Afghanistan 1990-94 as missing data, since the antiSoviet-backed-regimewarthatends in 1992 was ongoing duringpartof 1990-94, and this is the rule they apply otherwisefor country-periodsin which a civil war is ongoing. For instance, the war in Cambodiais coded as ending in 1991, and Cambodia 1990-94 is coded as missing datadue to the ongoing warat the startof the period.This procedureremoves from the potential sample the sixty-six countryperiods with a somewhat durable post-war peace, while twelve country periods with a quickly renewed(ornew) warareincluded.It is difficultto say whatkindof bias thisprocedure might introduce,if any.14But it is worthnoting thatthe treatmentof periodswith an 12. East Germanyand Dominica were dropped. 13. The nonindependentterritoriesthatappearin the estimationsample are Cape Verde1965-74, Fiji 1965-69, Namibia 1965-89, PapuaNew Guinea 1965-74, Reunion1975-89, andSuriname1965-74. All fifteen of these cases arecoded as "atpeace,"althoughCorrelatesof War(COW)codes an "extrastate" warthat startedin 1975 in Namibia.Since other"extrastatewars"are included,this may be a coding error. 14. Droppingperiodsof ongoing war artificiallyincreasesthe mean of the dependentvariable(onset) for countriesthathad a war,and especially for countrieswith multipleonsets. The experienceof countries thathad at least one civil war onset may thus be overweightedin the logit analyses. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 489 ongoing civil waris not symmetricanddependson whetherpeace prevailedfor one to five years afterthe war's conclusion.15 The estimationsample consists of only 750 out of the 1,288 countryperiodsthat makeup thepotentialsample-42 percentof the "potentialsample"is lost due to "listwise deletion"of cases thataremissing dataon one or moreindependentvariables(31 percentif one considersonly postindependencecountryperiods).The main sourceis missing economic data, and particularlythat needed to estimatethe averagegrowth ratein per capitaincome in the previousfive-yearperiod (the period 1960-64 disappears from the estimation sample for this reason).16As Rubin (1987) and, more recently in political science, King et al. (2001) have stressed, list-wise deletion is always inefficient and causes biased estimates except in the unlikely event that the missingness is "completelyat random."Twenty-sixof the 78 civil war onsets in the potentialsample (33 percent)are missing cases, which is worrisomegiven that civil war onsets arerelativelyrarein these dataand thus have a greaterimpacton the estimates than "zero"cases do.17Twenty-fourof the 26 cases lack data on economic growthin the previousfive-yearperiod. SXP The main independentvariableof interestin "Greedand Grievance"is a World Bank measureof primarycommodity exportsas proportionof GDP,known as sxp. Measuredat five-yearintervalsstartingin 1960 andmissing for only 125 of the 1,288 potentialcases, sxp has a meanof. 16 anda medianof. 11, indicatingthe highly skewed distributionshownin Figure 1.18Most of the variationin sxp (75 percent)is due to differentaveragelevels of primarycommodityexportsacrosscountries.The remaining quarteris due to variationover time within countries. The measurecovers exportsof goods classified in five categoriesof the Standard InternationalTradeClassification(SITC),listedin Table1, which also gives examples 15. Why dropthe eighty-oddperiodswith an ongoing civil warat all? A naturalalternativeis to code theseas zeros,since no new civil warstartedalthoughone couldhave.Concurrentcivil warsin a single countryappearin mostcivil warlists, thoughnotin the COW-basedlist usedby CollierandHoeffler.(Theywould occurin this list if anticolonialwarswerecodedin the colonialempireratherthanin the colony.)Of course,if one civil waris alreadyin progressin a country,the riskof anotherone startingwill probablybe lower.But if so, why not estimatethis effect ratherthandropthe cases (as in FearonandLaitin2003)? This happensto be impossiblewith the COW-basedlist usedby CollierandHoefflerbecause"civilwarin progress"wouldperfectly predictthe lack of onset of a new war,which causes a problemfor the maximum-likelihoodmethods of logit or probit.So this is perhapsa pragmaticargumentfor CollierandHoeffler'scodingproceduregiven the absence of concurrentwarsin theirwar list. 16. Note also thatthe five-yearperioddesign also implies thatthe "lagged"growthratecan be rather farfromthe warstartin question,for instance,if the warstartsin 1994 the growthrateestimatecomes from 1985-89. 17. King andZeng (2001) note thatwith a "rareevent"such as a civil war onsets (relativeto periods withoutonset), additionalevents aremore statisticallyinformativein thatthey have a biggerimpacton the estimatedvariance-covariancematrix. 18. Six country-periodshaveansxp estimategreaterthan1 (Bahamas1960-80andBahrain1980).The Bahamas'valuesareprobablya WorldBankcodingerror,as the valuesgo from2.16 in 1980 to 0.26 in 1985, and stay below 0.26 afterwards;possibly before 1985 the decimalpoint is one space too farto the right.In any event, all six cases are droppedfrom the estimationsample due to missing dataon othervariables. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 490 JOURNALOF CONFLICTRESOLUTION 500 Frequency 200 0 0.2 0.0 0.6 0.4 0.8 1.0 sxp 250 Frequency 100 0 -6 -5 -4 -3 -2 -1 0 log(sxp) TI Figure 1: Histograms of sxp and Log(sxp) of goods foundin each category.The measuredoes not includepreciousgems such as diamonds (which are found in SITC 66, nonmetallicmineralmanufactures),or, of necessity, contrabandnarcotics,both of which have been noted as sources of rebel fundingin the case-studyliterature. SXP AND FUEL EXPORTS An oil-exportingcountry'sper capitaincome does not reflect its level of bureaucratic developmentas well as would the same income level for a nonoil country. Fearon and Laitin (2003) argue that if per capita income is related to civil peace becauseit is mainlya measureof statepolice andbureaucraticcapability,this implies thatoil exportersshouldhavea highercivil warriskthanone wouldexpecton the basis of income. Additionally,oil exportsare an easy sourceof huge revenuesfor whoever controlsthe stateor the oil-producingregion (in contrastto, say, developingan effective income tax apparatus).This increasesthe valueof the "prize"of secession or state control.19 FearonandLaitinfindthatcountrieswithmorethanone-thirdof theirexport revenuesfromfuels haveroughlytwice as greatan annualriskof civil waronset (con19. Humphreys(2005 [this issue]) discusses a numberof otherhypotheticallypossible mechanisms. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions EXPORTSAND CIVILWAR 491 Fearon / PRIMARYCOMMODITY TABLE 1 sxp Components SITC 0 E.g. SITC 1 E.g. SITC 2 E.g. SITC 3 E.g. SITC4 E.g. SITC 68 E.g. Food and live animals All foodstuffssuch as wheat, coffee, sugar,livestock Beveragesand tobacco Self-explanatory Crudematerials,inedible, except fuels Textiles,rubber,wood products Mineralfuels, lubricants,and relatedmaterials Oil, coal, naturalgas Animal and vegetableoils, fats, and waxes Self-explanatory Nonferrousmetals Silver,copper,nickel, aluminum,lead, tin NOTE:SITC = StandardInternationalTradeClassification. trolling for income and other covariates). Using new data on oil productionand reserves(versusoil exportrevenues),Humphreys(2005 [this issue]) likewise finds a stronglink. Similarly,CollierandHoeffler(2002, 12) note that"of the manypotential disaggregationsof primarycommodityexportspermittedby [their]data,only one was significantwhenintroducedintoourbaselineregression,namelyoil versusnon-oil." Perhapsprimarycommodity exports appearto matternot because they indicate rebelfinancingpotentialbutbecausethey correlatewith oil production,which marks stateweaknessconditionalon income, or affectscivil warrisk via some othermechanism. Alternativelyor in addition,the samemechanismmay operatefor primarycommodity exports that Fearon and Laitin (2003) postulatefor oil. Conditionalon per capitaincome, a countrythatderivesa greatershareof nationalincome fromprimary commodityexportsmay have a relativelyweak stateapparatus.High dependenceon primarycommodityexportsmay associatewith the thin "extractiveinstitutions"that Acemoglu, Johnson,and Robinson(2001) argueexplainpoor economic growthperformance.Collier and Hoeffler (2002a) find thatsxp seems to mattereven when they controlfor the fuel exportcomponentof sxp, an issue I reconsiderbelow. The bivariaterelationshipbetweenprimarycommodityexportsas a percentageof GDP andfuel exportsas a percentageof GDP is fairly strong.Forthe 632 cases in the Collier and Hoeffler potentialsample with data on both variables,the correlationis .79; see Figure2 for the scatterplot.20 As Figure2 suggests, this fairly strongcorrelation is dueto the factthatbothvariablesareskewedandthecountriesthatscorehighest on bothmeasuresaremajoroil producers.However,the correlationremainsnontrivial even if one restrictsattentionto countrieswith less than,say,40 percentof theirGDP 20. Iconstructedfuel exportsas a percentageof GDPby multiplyingfuel as a percentageof exportrevenues by exportsas a percentageof GDP,bothfromthe WorldBank'sWorldDevelopmentIndicators.Notice thata numberof observationslie below the 45 degreeline in Figure2, which shouldbe impossiblesince fuel exportsshouldbe a componentof totalprimarycommodityexports(sxp).Evidentlytherearesome discrepancies in the fuel exportrevenuedataused for sxp and for the publishedfuel exportmeasure. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 492 JOURNALOF CONFLICTRESOLUTION 0.8 0.6 Exp./GDP 0.4 Command 0.2 Primary 0.0 0.0 0.2 0.4 0.6 0.8 Fuel ExDorts/GDP Figure 2: Fuel Exports and sxp fromfuel exports(thecorrelationis then .43). As I arguefurtherbelow, in so faras sxp appears related to civil war onset, this may be because of its relationshipto oil production. PRIMARY COMMODITY EXPORTS AND CIVIL WAR ONSET Model 1 in Table2 replicatesthe mainmodel in CollierandHoeffler(2002b). The control variablesare the log of per capita income in the first year of the five-year period;averageannualgrowthrate of income for the priorfive-yearperiod;"social fractionalization," a combinationof two measuresof ethnicandreligiousheterogeneity;21"ethnic dominance,"a dummy variable marking states whose largest ethnic group is between 45 and 90 percentof total population;peace years, the numberof monthssince any priorcivil war ended (begunat 172 in 1962 for stateswith no prior war,this being the numberof monthssince the end of WorldWarII); the log of total populationin the first year of the five-yearperiod;and a 0 to 1 measureof the geographicdispersionof the populationwithinthe country,highervalues of which indi21. CollierandHoeffler(2002b, 26-27) constructthis measureby multiplyingtogethertwo 0-to-100 scales of ethnicandreligiousheterogeneity,andthenaddingthe maximumof the two scales. They arguefor this functionalform on the groundsthatthey foundit to be (empirically)"superiorto variants"in an early version of the "Greedand Grievance"paper.I divide by 100 so that the estimatedcoefficient is more readable. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 493 TABLE2 Civil WarOnset and PrimaryCommodityExports(sxp) in Two DifferentSampleFrames Model 1: Five-Year Periods sxp 2 sxp 16.773** (.001) -23.800* (.018) Log(sxp) Log(income) Growth Peace years Log(population) Fractionalization Ethnicdominance Geo. dispersion Constant N N (wars) Model 2: Five-Year Periods -0.950** (.000) -0.098* (.018) -0.004** (.000) 0.510** (.000) -2.479** (.007) 0.480 (.144) -0.992 (.275) -3.437 (.167) 750 52 Model 3: Country Years 8.225* (.035) -14.307 (.075) 1.033** (.000) -0.991** (.000) -0.102* (.014) -0.004** (.000) 0.591** (.000) -2.629** (.005) 0.513 (.120) -1.120 (.216) -0.473 (.842) 750 52 -0.535** (.003) -0.146** (.000) -0.004** (.000) 0.311** (.001) -0.822 (.244) 0.396 (.122) -0.167 (.820) -2.502 (.097) 4,466 69 Likelihoodratiotest forjoint significanceof sxp and sxp2: 5.05 16.56 yf=2 .081 .000 Prob> Model 4: Country Years 6.827 (.062) -12.528 (.104) Model 5: Country Years 6.154 (.091) -11.531 (.132) Model 6: Country Years 5.870 (.091) -10.993 (.132) -0.432** (.005) -0.147** (.000) -0.004** (.000) 0.281** (.001) -0.409** (.007) -0.130** (.000) -0.004** (.000) 0.253** (.003) -0.441** (.002) -0.132** (.000) -0.004** (.000) 0.258** (.001) 0.398 (.120) -0.017 (.982) -3.091* (.028) 0.170 (.815) -2.846* (.039) -2.567 (.052) 4,515 70 3.82 .148 4,605 70 3.15 .207 5,008 73 3.31 .192 NOTE:Logitestimateswithcivil waronset as the dependentvariable;observationsarecountryfive-yearperiodsin models 1 and2 andcountryyearsin models 3 through6. Incomeandpopulationarelagged;income growthis for the priorfive-yearperiodor last five years.p-values are in parentheses. *p < .05. **p < .01. cate moreconcentratedsettlementpatterns.See CollierandHoefflerfor detailson the sourcesand constructionof these variables,and argumentsfor why they shouldbe in the model as predictorsof civil war onset. The mainconcernhereis with the resultsfor the primarycommoditymeasures,sxp and its square.A likelihoodratiotest confirmswhat the individualp-values suggest: the odds that adding primarycommodity exports to the model in this mannerhas improvedthe fit of the model by chance are estimatedat less thanone in a thousand. The coefficients attenuatea bit more than 20 percentif one drops ethnic dominance This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 494 JOURNALOF CONFLICTRESOLUTION TABLE3 Proportionof Five-YearPeriodswith Civil WarOnset by Populationand CommodityExports(Treciles) PrimaryCommodityExports/GDP Population(millions) Less than 3.5 3.5 to 12.2 More than 12.2 Total Low .043 69 .032 94 .057 174 .047 337 Medium High Total .020 100 .081 135 .160 100 .087 335 .029 172 .090 100 .178 45 .069 317 .029 341 .070 329 .107 319 .068 989 andgeographicdispersionfrom the model, thoughstatisticalsignificanceremains.If one has only sxp and its squarein the model and nothingelse, the estimatedrelationship appearsconsiderablyweaker,though still quite unlikely to be due to chance. When the log of countrypopulationis added,the estimatedcoefficients on primary commodityexportscome close to theirvaluesin model 1. This is becauselargercountries tend to have low commodityexportsas a percentageof GDP,but a greatercivil warrisk. Table3 takesa less parametricapproach,showingthe proportionof country five-year-periodsthathad a civil war start,by trecileson both countrypopulationand primarycommodityexportsas a shareof GDP.It shows thatthe associationbetween commodityexportsand civil war onset holds only for largercountries. The impliedsubstantiveimpactof primarycommodityexportsbasedon model 1 is considerable.Holdingothervariablesat theirmedianvalues,the estimatedprobability of civil waronset rises from .011 at the 10thpercentileof sxp, to .031 at the median,to .11 at the 90th percentile. The slight decline at high levels of sxp implied by the squaredterm only begins aroundthe 90th percentileof sxp, which is 39 percentof GDP from primarycommodityexports. DO VERY HIGH LEVELS OF COMMODITY EXPORTS LOWER CIVIL WAR RISK? AlthoughCollier and Hoeffler's parabolicspecificationof the impactof primary commodity exports on the log odds of civil war produces statistically significant results, so does using, for example, the log of sxp. Statisticianshave developedless parametricmethodsthatenableone to examinewhatthe datathemselves"say"about the form of the relationshipbetweencivil warrisk andprimarycommodityexports.22 Figure3 plotstheresultsof a generalizedadditivemodel(GAM)versionof Collierand 22. Conditional,of course,on the restof the model. See Beck andJackman(1998) for an introduction writtenfor political scientists. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 495 10 changeinlog(odds)of onset 95% confidence interval onset5 war of 0 log(odds) in -5 change 0.0 0.2 0.4 0.6 0.8 Primary commodity exports/GDP (sxp) Figure 3: Change in Log(Odds) of Civil War as a Function of sxp Hoeffler'score specification,in which I estimatethe form of the effect of sxp on the log-odds of civil war directly. Giventhe size of the 95 percentconfidenceintervalabove 50 percentof GDP from primarycommodityexports,thereis scarcely any indicationof a parabolic,increasing-then-decreasingrelationship.Figure 3 also makes clear why adding squaredsxp improvesthe fit of the model. A straightline fit to the datawould averageacross the steep partwhere most of the cases are and the flat partwhere the small numberof extremelyhigh sxp cases are.Figure3 suggeststhat,basedon the CollierandHoeffler model, the probabilityof civil waris increasingin sxp up to about20 or 25 percentof nationalincome and then essentially flat above this. So the actualrelationshipin the datais betterapproximatedby the log of sxp. Model 2 in Table2 shows the relevant results. A 1 percentincrease in primarycommodityexports in GDP is estimatedto associate with a 1 percentincreasein the odds of civil war outbreak.23 CollierandHoefflersuggestedthatthe increasing-then-decreasing patternwas due to higher primarycommodity export shares initially favoringrebels but ultimately favoring the state due to higher tax revenues.While one can propose a model that makes functional form assumptionsto rationalizethis pattern,one can also easily 23. The overallfit of the model is betteras well, as judged by the AkaikeInformationCriterion. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 496 JOURNALOF CONFLICTRESOLUTION design a model in which the two effects simply offset each other,yielding no correlation. If one thinksprimarycommodityexportsindicatean economy thatmore easily supportsrebelfinancing,then it is easierto explaina logarithmicrelationship.Still, if one also thinksthatprimarycommodityexportsincreaseresourcesavailableto governments, then one still needs an explanation for why this would not offset the additionalsupportprovidedto rebels. In whatfollows, I will considerboth CollierandHoeffler'sparabolicspecification and the empiricallybetter supportedlogarithmicspecificationwhen looking for an effect of primarycommodities. COUNTRY YEARS VERSUS FIVE-YEAR PERIODS Why choose five-yearperiodsstartingin 1960 ratherthan1961, or 1962 (etc.)?Are the resultssensitiveto this arbitrarychoice? Civil waronset,the dependentvariable,is measuredat least annuallyin this andmost othercivil warlists, as areincome, income growth, population,and peace years. The available measures of social fractionalization,ethnicdominance,and geographicdispersionaretime invariantor close to it. Thus, using countryyears as the unit of analysis would seem more appropriate.In addition,a country-yearframingavoids the problemswith coding quickly renewed warsdiscussedabove andallows consistentandbrief lag times for income per capita, economic growth,population,and peace years.24 The one considerationthat arguablyfavors using five-year periods is that sxp is measuredat five-yearintervalsbeginning in 1960. However,as noted above, threequartersof the variationin sxp is acrosscountries,and sxp in year t is well correlated with sxp in yeart - 5 (r = .85). Thus,filling in the missingyearswith a linearinterpolation or spline is certainlya defensible approachto dealing with the missing data. I constructeda country-yearversionof the CollierandHoefflerdata,interpolating values for primarycommodityexports.25Model 3 in Table2 shows the resultsusing the country-yearframingand the same set of independentvariablesas in Collier and Hoeffler (2002b). The estimatedcoefficients cannot be directly comparedto those reportedin the five-yearperioddesign, since the dependentvariableis different(log odds of war onset in the next year versusin the next five years). The changedsignifi24. Seventeenwarsin theCollierandHoefflerlist startin a yearthatis divisibleby five. Forthese,there is no lag at all in the five-yearset up forincomepercapitaandpopulation,whichraisesa mildconcernabout endogeneity. 25. To avoid implausibleextrapolations,I extendedthe first or last measuredvalue forwardor backwardas appropriate.With few exceptions, this means using the sxp value for 1995 for years after 1995. WhenI triedextrapolatingfor these years,the resultsareless favorableto primarycommodityexports.Following CollierandHoeffler,I replicatedor interpolatedthe valuesfor social fractionalization,ethnicdominance,andgeographicdispersionintomissingyears,since theseeitherdo notvaryin time orvaryonly in one year(geographicdispersion).Formissingincome,growth,andpopulationdata,I employedthe sameprocedureas CollierandHoeffler,usingWorldBank-estimatedgrowthratesto extendPennWorldTablesincome dataforwardpast 1992 (see FearonandLaitin[2003] for a discussionof the income andpopulationsources used here).In constructingthe new dataset, I foundsome codingerrorsin the CollierandHoefflerdata,particularlyin the "peaceyears"variable.It appearsthatno consistentrule is appliedfor whetherpeace years shouldbe countedto the startof the five-yearperiodor the startof a war thatbegins duringthe five-year period.I did not correctthese errorsin the country-yearversionto ensurecomparability.I also doubtthat doing so would have much effect. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 497 TABLE4 Civil WarOnset and Log(sxp) in the Country-YearFraming Model 1: CountryYears Log(sxp) Log(income) Growth Peace years Log(population) Fractionalization Ethnicdominance Geo. dispersion Constant N N (wars) .290 (.111) -.549** (.002) -.146** (.000) -.004** (.000) .309** (.001) -.772 (.274) .387 (.131) -.082 (.909) -1.074 (.479) 4,466 69 Model 2: CountryYears Model 3: CountryYears .202 (.218) -.457** (.002) -.146** (.000) -.004** (.000) .278** (.002) .159 (.303) -.471** (.001) -.133** (.000) -.004** (.000) .258** (.002) .384 (.135) .065 (.928) -1.900 (.144) 4,515 69 -1.523 (.203) 5,008 73 NOTE:Logit models with civil war onset as the dependentvariableand countryyears as observations. Incomeandpopulationarelaggedoneyear;incomegrowthis forthepriorfiveyears.p-valuesarein parentheses. *p < .05. **p < .01. cance levels, however,suggest thatthe model may fit the dataless well. Note thatthe estimatedcoefficient for fractionalizationfalls by a factor of three and is no longer remotely significant,and the estimatedcoefficient for geographicdispersionis now much closer to zero. Thep-values for sxp and its squarehave increased,and the relevantlikelihoodratiotest fails to rejectthe null hypothesisthattheircontributionto the model is due to chance at the 5 percentlevel (p = .081). Also worrisomeis thatthe estimatedcoefficientsfor sxp andsxp2arenow quitesensitiveto minorchangesin the model's specification.Models4, 5, and6 in Table2 drop, in succession, the fractionalization,ethnic dominance, and geographic dispersion variables,which showed little or no sign of a statisticallysignificantrelationshipto civil waronsetin models 1 or 3. In fact, droppingany of these threevariables,singly or in any combination,leaves a model in which one cannotrejectthe null hypothesisthat primarycommodityexportsandtheirsquarearestatisticallyunrelatedto civil warrisk (usingthe likelihoodratiotest anda 10 percentthreshold).As models 5 and6 in Table 2 illustrate,the lack of statisticalsignificancecan be substantial. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 498 JOURNALOF CONFLICTRESOLUTION Table4 presentsmodelsusing the logarithmof sxp ratherthantheparabolicspecification adopted by Collier and Hoeffler. Primarycommodity exports now cease to show a statisticallysignificanteffect at the 5 percentlevel even when all controlvariables are included (model 1), with even smallercoefficients and significancelevels when I dropthe more dubiousof the controls(models 2 and 3). Theseresultsdo notruleoutthepossibilitythathigherlevels of primarycommodity exports(at least up to a point) cause a countryto have a higherrisk of civil waronset. However,the strengthof the observedassociationdependsheavily on the choice of sampleframingandcontrolvariables,somethingthatis farless trueof othervariables in the model, such as per capitaincome, countrypopulation,years of peace, and economic growth rate. Given the great uncertaintyabout what variables should be includedin a statisticalmodel of civil warriskin principle,one can say thathigherprimary commodity exports are not robustlyassociatedwith higher risks of civil war, even in Collier and Hoeffler's own data.26 MULTIPLYIMPUTING MISSING DATA What accountsfor the weakerresultsin the country-yearframingof the data set? One possibility is that merely by making the lag times and treatmentof successive warsconsistent,I havegottenridof accidentsthatproducedapparent"significance"in the five-yearperiodset up. Anotherpossibilityis thatthe country-yearframingallows more efficient use of the data (that is, fewer missing observations).Notice that the numberof wars in the estimationsamplerises from fifty-two in the five-yearperiod analysis to as many as seventy-three(of seventy-eight)in the country-yearanalysis. This is largelybecause the latterloses fewer cases due to missing dataon the lagged economic growthrate. By using multipleimputation,one can gain insight into how much of the "significance"of primarycommodityexportsis due to list-wise deletionof observationsdue to missingdata.Table5, model 1, uses the five-yearperiodframingandthe same specificationas in Table2, model 1, but multiplyimputesmissing values so thatinformation from all 1,288 cases in the "potentialsample"can be used.27The dependentvariable-the log odds of civil war outbreakin the next five years-is the same, so the 26. It is particularlystrikingthatonly by includingcontrolsthatdo notthemselvesappearstronglyor at all relatedto civil war risk do primarycommodityexportsbegin to appearto have a consistent impact. Anothersharpdifferencebetween resultsfor the five-year-periodandcountry-yearframingsconcernsthe applicationof conditionalfixed effects: sxp andsxp are stronglysignificanteven with fixed effects in the five-yearperiodset up, butnot at all with fixed effects and country-years. 27. Only 1,063 cases areused in the logit. Before makingthe datasets with imputedvalues,I dropped the 121 preindependencecountryperiodsand the threecountriesthatwere neverformallyindependent.I also dropfromthe estimationthe countryperiodsduringwhich a waris in progress,since they are"missing in principle"in CollierandHoeffler'ssetupratherthanforlackof information.I thinkthesearethe mostjustifiabledecisions, but in any event, the resultswere slightly worse for primarycommodityexportswhen I imputedon thebasis of all 1,288cases in thepotentialsample.See the appendixfordetailson the imputation model. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 499 TABLE5 MultiplyImputedMissing Data Models for Civil WarOnset Model 1: Five-Year Periods sxp sxp2 Log(income) Growth Peace years Log(population) Fractionalization Ethnicdominance Geo. dispersion Constant N N (wars) 8.320* (.033) -11.775 (.120) -.581** (.002) -.091** (.006) -.003** (.002) .387** (.000) -.626 (.436) .432 (.118) .060 (.937) -4.500* (.022) 1,063 75 Model 2: Five-Year Periods 7.156* (.049) -10.319 (.155) -.477** (.004) -.087** (.007) -.003** (.001) .354** (.000) Model 3: Country Years -4.502* (.017) 6.088 (.104) -9.965 (.195) -.509** (.001) -.085** (.000) -.003** (.001) .291** (.001) -.554 (.409) .395 (.116) .073 (.922) -2.859* (.040) 1,063 75 5,168 76 Model 4: Country Years 5.195 (.142) -8.789 (.233) -.424** (.002) -.080** (.000) -.003** (.000) .265** (.001) -3.040* (.020) 5,168 76 NOTE:Combinedlogit estimatesfrom sixteen multiplyimputeddata sets with civil war onset as the dependentvariable;observationsarefive-yearperiodsin models 1 and2 andcountryyears in models 3 and4. Incomeandpopulationarelagged one year;income growthis for the priorfive-yearperiodor five years.pvalues are in parentheses. *p < .05. **p < .01. coefficientsmay be directlycompared.(The percentageof cases with a civil waroutbreakis also very similarfor the observedand imputeddata,at about7 percent.) Overall,the Collier-Hoefflerstatisticalmodel performsworse when all cases with some dataareused in the estimation.Severalof the coefficientestimatesmove noticeablytowardzero, althoughstandarderrorsalso fall a bit, reflectingthe efficiencygains from using more data.Among the initially "significant"variables,primarycommodity exportsandtheirsquareshowthe largestpercentagechanges-the estimatesfor the effect of primarycommodityexportsdropa factorof two when I avoid list-wise deletion.28Substantively,whereasgoing fromthe 10thto 90th percentileon sxp associates with a change in risk from 1.1 to 11 percentin Collier and Hoeffler's set up, with the missing datamodel the correspondingspreadis 2.3 to 7.4 percent.Statisticalsignifi28. The marginaleffect of sxp on the log odds of civil war outbreakat the medianlevel of sxp (.11) reducesfrom 11.54 (Table2, model 1) to 5.72 (Table5, Model 1). This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 500 JOURNALOF CONFLICTRESOLUTION cance also weakens somewhat,especially for sxp2.Model 2 in Table5 shows further deteriorationin the estimatedeffects for primarycommodityexportswhen I dropstatistically the insignificant measures for fractionalization,ethnic dominance, and geographicdispersion. Models 3 and 4 in Table5 show the analogouslogits for multiplyimputeddatain country-yearformat.Hereone sees a moremarkedreductionin the significancelevels of the primarycommodityexportvariables.It appearsthatbothlist-wise deletionand idiosyncrasiesof the five-yearperiodformatcontributedto the apparentstrengthof the associationbetweenprimarycommodityexportsand civil warrisk in Collier and Hoeffler's analysis. OIL OR PRIMARY COMMODITY EXPORTS? As discussed above, oil exports are a majorcomponentof primarycommodity exportsfor a numberof countries,and the two variablesare moderatelywell correlated. Collier and Hoeffler (2002a) reportthat high oil dependenceassociates with highercivil warrisk thanone would expect on the basis of otherprimarycommodity exportsalone, althoughthe effect for the othercommoditiespersists.Using the data from Collier and Hoeffler (2002b) in the five-yearperiodformat,I find thatthe measures of primarycommodityexportsremainreasonablystablewhen I add a variable for fuel exports as a percentageof total exports (see Table 6, model 1). This result dependsto some extenton havingthe statisticallyinsignificantvariablescoding geographicdispersionof populationand ethnic dominancein the model, as shown in Table6, model 2. In the country-yearframing,however,oil and primarycommodity exports trade places. Table6, model 3, shows thatneitheroil nor sxp and its squareareparticularly impressivewhen all threeincludedin the countryyearset up;model 4 shows a similar resultwhen I use the log of sxp. Table6, model 5, shows thatwhen one dropsthe more marginalvariables,primarycommodity exports are statisticallyinsignificant,while there is strongersupportfor a nonrandomassociationbetween high oil exports and civil war risk. PRIMARY COMMODITY EXPORTS AND STATE STRENGTH Collier and Hoeffler's theoreticalargumentfor expecting a strong relationship between primarycommodity exports and civil war risk is that primarycommodity exports measurerebel financing opportunity.This argumentis problematicfor two main reasons. First, sxp is composed mainly of cash crops and fuel exports. Both requirecontrolof a nationaldistributionsystemto exploit, which rebelgroupsalmost neverhave (Fearonand Laitin2003). It is conceivablethatcash crop and oil exports happento be correlatedwith the presenceof drugsandpreciousgems thathave been This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 501 TABLE6 Oil versus PrimaryCommodityExports Model 1: Five-Year Periods sxp 2 sxp 13.552* (.013) -19.380 (.052) Model 2: Five-Year Periods 7.127 (.114) -11.070 (.178) Model 3: Country Years 6.800 (.116) -13.446 (.106) Log(income) Growth Peace months Log(population) Fractionalization Ethnicdominance Geo. dispersion Constant N N (wars) 0.007 (.332) -1.017** (.000) -0.084* (.045) -0.003** (.001) 0.397** (.007) -2.307* .011 0.546 (.095) -1.126 (.223) -0.915 (.769) 672 52 0.008 (.229) -0.630** (.002) -0.089* (.027) -0.003** (.001) 0.240 (.058) -1.467 (.599) 722 53 Model 5: Country Years 3.286 (.389) -8.750 (.237) 0.011 (.068) -0.663** (.001) -0.144** (.000) -0.003** (.000) 0.247* (.029) -1.081 .142 0.496 (.061) -0.325 (.672) -1.012 (.591) 0.205 (.375) 0.010 (.090) -0.690** (.000) -0.143** (.000) -0.003** (.000) 0.258* (.031) -1.089 .142 0.488 (.066) -0.212 (.779) 0.035 (.984) 3,972 65 3,972 65 Log(sxp) Fuel exports Model 4: Country Years 0.012* (.030) -0.525** (.001) -0.128** (.000) -0.003** (.000) 0.157 .112 -1.050 (.519) 4,339 69 NOTE:Logit estimateswith civil waronset as the dependentvariable;observationsarefive-yearperiodsin models 1 and2 andcountryyearsin models 3, 4, and5. Incomeandpopulationarelagged one year;income growthis for the priorfive-yearperiod or five years. Fuel exportsare as a percentageof total exports,pvalues are in parentheses. *p < .05. **p < .01. observedto financerebelgroupsin a numberof conflictsaroundthe world.Butthereis no good reason to expect that this is the case.29 Second, even if production of primary commodity exports does raise opportunities for "war taxation" by rebel groups, it also provides the government with a relatively 29. Moreover,recent work by Lujala, Gleditsch, and Gilmore (2005 [this issue]) and Humphreys (2005) casts doubton the strengthandnatureof the linkbetweendiamondsandcivil war.Lujala,Gleditsch, andGilmorefindlittle evidencethatdiamonddepositsaresystematicallyassociatedwith anelevatedriskof onset (althoughalluvialdiamondsmay be relatedto higherrisksof "ethnic"waronset). Humphreysfinds a strongrelationshipboth in Africa and globally between level of diamondproductionand civil war risk, thoughhe arguesthatthe datado not supportthe mechanismsuggestedby CollierandHoeffler(easierrebel finance). This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 502 JOURNALOF CONFLICTRESOLUTION easy sourceof tax revenue.Why shouldrebelsbe morefavoredby this sourceof revenue than the government?Theremay be an argumenthere for drugsor alluvial diamonds, but if anythingit would seem to work the otherway for cash crops and fuel exports. An alternativehypothesisis thathigherdependenceon primarycommodityexports for nationalincome marksweakerstate institutions,on average,for a given level of income. This argumenthas often been madewith respectto oil producers(Karl 1997; FearonandLaitin2003; Wantchekon2000). As TerryKarl(1997, 61) writes,"Given theiraccess to easy revenuesfrompetroleum,few [oil exporters]soughtto supplement state income throughsubstantialincreasesin domestictaxation. . . high statenessin this arena[runningtheoil industry]occurredatthelong-termexpenseof theircapacity to build extensive, penetrating,and coherentbureaucraciesthat could successfully formulateand implementpolicies." The same generalargumentmightextend,with less force, to nonfuelprimarycommodities. As with oil, other primarycommodity exportsrequirenationalcollection and marketingsystems thatmake statetaxationrelativelyeasy. Acemoglu, Johnson, andRobinson(2001) arguethatwheresettlementwas not a good optiondueto disease, colonial regimes set up "extractiveinstitutions"designed to do little more than tax commodity exports. RobertBates (1981) describes how the commodity marketing boardsdesigned by the colonial regimes in Africa were often the sole basis for state revenue and patronageafter independenceand provided little incentive for urbanbased elites to pursueconstructiveruraldevelopmentstrategies.Althoughthe institurequiredfor cash cropsis moreextensiveandsocially penetrating tionalinfrastructure than for "enclave"mining industries,it could be that high dependenceon primary commodityexportsmarksstateswith less developedadministrativecapacitiesgiven theirincome. Unfortunately,good direct measures of a state's administrativecapability and integrityarelacking.Acemoglu, Johnson,andRobinson(2001) and othershave used informationfrom surveysof investorson the risk of expropriationandrepudiationof governmentcontractsin differentcountries(KnackandKeefer1995). These aremeasuredfor about120 countriesbetween 1981 and 1994 on a scale of 0 to 10, withhigher valuesindicatinglowerrisksof expropriationor repudiationof contracts.Not surprisingly,these measuresarehighly correlatedwith percapitaincome.If, for a given level of income, primarycommodityexportsassociatewith weakerstates,then one would expect the partialcorrelation(controllingfor income) between the contractrepudiation or expropriationmeasuresand sxp to be negative. Table7, model 1, reportsthe regressionof the measureof contractobservanceon logged primarycommodityexportsandlogged percapitaincomefor the 115 countries with data.30As expected,for a given level of income, stateswith greaterprimarycommodity dependenceare perceivedas less reliableby investors,on average,although 30. Contractobservanceis averagedfor each countryoverthe availabledatafrom 1982 to 1995;there is very little variationovertime withincountries,andthereis no theoreticalreasonto expectthatshort-term fluctuationsin primarycommodityexportsmeasurechangesin statecapacityin the sense described.Log of income is averagedoverpost-1979 valuesfor each country,andlog of sxp is averagedover all values.I also consideredthe measureof risk of expropriation,which gives nearlyidenticalresults. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 503 TABLE7 GovernmentObservanceof Contractsand sxp Log(sxp) Log(income) Model 1 Model 2 -0.351** (2.64) 1.361** (12.28) -0.161 (1.13) 1.429** (13.04) -0.014** (2.98) -5.435** (6.25) Fuel exports Constant N R2 -5.558** (6.19) 115 .604 115 .633 NOTE:Ordinaryleast squareswith a 0 to 10 measureof perceivedgovernmentobservanceof contractsas the dependentvariable,averagedfor each countryover availabledatafrom 1982 to 1995. Log(sxp)is averaged for each countryover availabledatafrom 1960 to 1995, andlog(income)andfuel exportslikewise for datafrom 1980 to 1999. t-statisticsare in parentheses. **p < .01. the substantiveimpactis not large.31Whenone addsfuel exportsas anothermeasureof stateweaknessconditionalon income (see Table7, model 2), the estimatedcoefficient for primary commodity exports more than halves and becomes statistically insignificant. So oil exportershave significantlyweakerstatesgiven income per capita,according to this measureof stateweakness.But while exportersof otherprimarycommodities have marginallyless reliable governmentson average, the effect is not very consistent. CONCLUSIONS AND POLICY IMPLICATIONS Four main conclusions emerge from the preceding analysis. First, the empirical association between primarycommodity exports and civil war outbreakis neither strongnorrobust,even using CollierandHoeffler's(2002a, 2002b) civil warcodings and model specifications.Second, insofaras thereis some association,this is due in partto the inclusion of fuel exports in the primarycommodity measure,which are morerobustlyrelatedto conflictonset.Third,it seems unlikelythatoil exports(orcash crops)predicthighercivil warriskbecauseoil providesbetterfinancingopportunities for would-berebels. It seems more likely thathigh oil exportsindicatea weakerstate given the level of per capitaincome and possibly a greater"prize"for state or seces31. Movingfromthe 10thto the 90th percentileon sxp is estimatedto associatewith a dropof 0.75 on the 10-pointscale for contractrepudiationrisk, or abouthalf of one standarddeviation. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 504 JOURNALOF CONFLICTRESOLUTION sionistcapture,bothof which mightfavorcivil war.Similarconsiderationsmay apply for nonfuel commodityexports. Fourth,thereis directevidence thatoil exportershave less reliableand competent states given their income levels and weakerevidence that this is true on averagefor exportersof otherprimarycommodities. What implicationsdo these findings have for policy regardingnaturalresources and civil war?We should begin by distinguishingtwo questions.First, what policy measuresshouldbe takento preventnew civil warsfrombreakingout?This question canbe informedby researchon the causesof civil waronset,whichis the focus of Collier and Hoeffler's work on primarycommodityexports. Second, what policy measuresshouldbe takento shortenan ongoing civil war?Answersto this questionmight be informedby researchon whatdeterminescivil warduration.CollierandHoeffler's researchon primarycommodity exports and civil war onset is not directlyrelevant here. Regardingthe second policy question-What shouldbe done to shortenan ongoing civil war?-it is just common sense thatif a particularrebel groupis financedby the "looting"of naturalresourcerents,thena policy optionforhelpingto endthe waris to try to cut off this source.No fancy cross-nationalresearchis needed to supportor make such an argumentplausible.32Thus, policies to eliminatethe sale of "conflict diamonds,"to secure oil pipelines, or to reduce demandand supply of narcoticsare natural possibilities for such cases.33 Regardingthe firstquestion-What shouldbe done to preventcivil waroutbreaks in general?-I have arguedhere thatthereis no clearevidence thathigh levels of primary commodity exportscause higher risk of civil war onset by making for easier rebelstart-upfinance.If this is correct,thenpolicy measuresintendedto "diversify... economies and visibly channel commodity income into social service programs"would not be expected to reduce civil war risks, at least not via the posited mechanism.34 Oil exportersdo seem to havebeen moredisposedto civil waronset,butit is not yet clearwhatthe most importantmechanismsare.If, as arguedhere,oil proxiesfor weak stateadministrativecapabilitiesat a given level of income, or if oil makesfor trouble by raisingthe "prize"value of stateor regionalcontrol,thenpolicies to involve internationalinstitutionsin the monitoringand managementof weak states'oil revenues 32. Cross-nationalresearchmay be useful to establishhow prevalentis the phenomenonand potentially for estimatinghow effective are differentmeasuresto cut rebel fundingfrom naturalresourcerents. Fromcase studies,it is quiteclearthatrebels sometimesdo obtainfinancethis way (see, for example,Ross 2004). Fearon(2004) finds thatrebel financefrom contrabandis stronglyassociatedwith longer civil war duration.In theirstudy of civil war duration,Collier,Hoeffler,and Soderbom(2004) find thatfalls in the priceof primarycommoditiesassociatewithshorterdurationin countriesthatarehighlydependenton them, althoughit is unclearif this is due to an effect on rebelor governmentfunding.Humphreys(2005) findsthat oil anddiamondproductionare associatedwith shorterratherthanlongercivil wars.My pointin the text is thateven if this is correcton average,if one observesrebelsliving off illicit diamondrevenuesin a particular case (like Angola),thentryingcut off this sourcewouldremainanobviouspolicy optionfortryingto endthe war. 33. Providedthatit is apparentthatthe rebel groupoffers less prospectof good governancethanthe governmentin power,which is not always the case. 34. JohnBurgess,"CivilWarsLinkedto CertainEconomies." This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions Fearon / PRIMARYCOMMODITY EXPORTSAND CIVILWAR 505 couldhelpbreakthe link. Internationalmonitoringandinfluenceon the distributionof oil revenuesmight reducethe payoffs for an extractive,exploitativestrategyof state captureandcontrol,while increasingpoliticians'incentivesto competeon the basis of service and infrastructureprovision. For example,the WorldBank has recentlyattemptedto negotiatemonitoringand managementarrangementsas a condition for supportingpipeline developmentin southernChad.Outsideexpertsare skepticalthatthis specific deal will work,but the generalidea seems worthpursuingbased on the empiricalfindingsaboutoil andconflict.35Forweak statesthatalreadyexportlargeamountsof oil, the IMF,WorldBank, or a new internationalinstitutioncould offer a standardizedexternalmonitoringand managementservice thatthe state could publicly commit to. If a weak-stateoil producerholds elections,the existenceof such an optioncould inspireor drivecandidates to competefor votersupportby declaringa willingnessto committo the international package.36 While the empiricalcase must be deemed "notproven,"it remainsreasonableon theoreticalandanecdotalgroundsto thinkthatthe availabilityof rebelfinanceaffectsa country'sprospectsfor civil war.We still do not know, however,if rebel finance is a "criticalconstraint"thatvariesa greatdealfromplaceto place, orif it is easily satisfied providedotherconditionsare satisfied(e.g., weak centralgovernmentwith little rural presence, a sudden increase in grievancesdue to changed governmentpolicy, or a prevalenceof unemployedyoung males).Indeed,we stillknow little aboutthe sources of rebel groups'incomes. How much comes from local donationsand "revolutionary taxes,"how much from foreign governmentsor companies,how much from diasporas? This is difficult informationto gather,althoughinterestingwork by Weinstein (2005 [this issue]) and Humphreysand Weinstein(2004) is beginningto explorethe effect of differentincome sourceson rebel organizationand strategies.While Collier andHoeffler'sproposalthatthe availabilityof rebelfinanceis a key determinantof the prospectsfor civil war remainsto be demonstrated,it has without doubt helped to generatean importantresearchagenda. APPENDIX The Imputation Model basedon a I usedJ. L. Schafer'ssoftware,NORM,for producingmultipleimputations multivariatenormalmodel of the data(Schafer2000). The centralideais thatthe variablesin the imputationmodel are assumed to have a multivariatenormaldistribution,the parametersof which areestimatedfromthe observeddata.Imputedvaluesformissing dataaredrawnfromthe relevantconditionaldistributionto make a set of n imputed data sets. Coefficient estimates 35. On the Chadproject,see for exampleDaphneEvitar,"StrikingIt Poor:Oil as a Curse,"New York Times,June7, 2003, p. B9; andKrasner(2004). JeffreySachsanda teamfromColumbiaUniversity'sEarth Institutehave been involved in helping to design institutionsfor the managementof oil revenuesin Sao Tom6e Principe.See http://www.earthinstitute.columbia.edu/cgsd/STP/. 36. Krasner(2004) proposesthis and severalother"sharedsovereignty"mechanismsto make weak stateoil revenuesless easily appropriableby corruptpoliticians. This content downloaded from 171.65.249.4 on Thu, 24 Oct 2013 17:09:01 PM All use subject to JSTOR Terms and Conditions 506 JOURNALOF CONFLICTRESOLUTION based on these n data sets are then combined using "Rubin's rules" to yield the numbers reported in Table 5. I limited the variables in the imputation model to the variables in Collier and Hoeffler's (2002b) main specification: civil war onset, primary commodity exports, the log of per capita income, the log of population, fractionalization, ethnic dominance, years of peace, and geographic dispersion. To make the multivariate normal assumptions more accurate, primary commodity exports and fractionalization were logged for use in the imputation model. Imputed values for peace years were rounded to the nearest integer, and imputed values for the dichotomous variables civil war onset and ethnic dominance were rounded to zero or one, whichever was closer. The sixteen imputed data sets were created by saving the estimates from every 5,000th round of 80,000 rounds of data augmentation. 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