Giant oil discoveries and conflicts

Abstract

This study investigates the effects of oil discoveries on conflict. We propose that the effects from oil discoveries may differ depending on types of conflicts, mainly interstate versus intrastate. Using a measure for oil discoveries for a global panel of countries between 1970 and 2012, we find a positive association between oil discoveries and both conflict types, controlling for other conflict determinants and unobserved heterogeneity. However, we observe that the effects on intrastate conflicts are evident within a year of discovering the oil, while the effects on interstate conflicts only become evident after five years of the discovery. We also find that within intrastate conflicts, the results are mainly driven by the effects on ethnic conflicts. The findings imply that there may be different mechanisms at play for interstate versus intrastate conflicts related to resource discoveries. For example, resource-induced inequality can aggravate already existing tensions between groups in society, which can result in internal conflict soon after discovering the resource. On the other hand, the feasibility of engaging in conflict with a neighbouring resource-rich country depends on fighting capacity and mobilising resources, which can delay interstate conflicts. Overall, we believe the results from this study will provide some further understanding to the dynamics involving natural resources and types of conflict.