rafmacalaba/datause-encoder-data huggingface dataset:
The causes of civil war
WPS4254

# **The Causes of Civil War**

Simeon Djankov The World Bank and CEPR

## Marta Reynal-Querol<sup>1</sup>

Universitat Pompeu Fabra, CEPR, and CESifo

**Abstract** The dominant hypothesis in the literature that studies conflict is that poverty is the main cause of civil wars. This paper instead analyzes the effect of institutions on civil war, controlling for income per capita. The authors set up a model in which institutions are endogenous and colonial origins affect civil wars through their legacy on institutions. The 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 75<sup>th</sup> percentile is associated with a reduction of 38 percentage points 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.

## World Bank Policy Research Working Paper 4254, June 2007

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._ 1 We are indebted to Daron Acemoglu, Antonio Ciccone, José G.Montalvo, Diego Puga and seminar participants at Universitat Pompeu Fabra, University of California Irvine, and University of Namur for their comments.

1
The structure of import tariffs in
            the Russian Federation : 2001-05
The Russian tariff structure contains
            over 11,000 tariff lines of which about 1,700 use the
            so-called "combined" tariff rate system. For the
            combined system tariff lines, the actual tariff applied by
            Russian customs is the maximum of the ad valorem or specific
            tariff. The lack of available data and the difficulty in
            calculating the ad valorem equivalence of the specific
            tariffs have resulted in some previous efforts that have
            simply ignored the specific tariffs. This is the first paper
            to accurately assess the tariff rates. The authors show that
            ignoring the specific tariffs results in an underestimate of
            the actual tariff rates by about 1 to 3 percentage points,
            depending on the year. The average tariff in Russia has
            increased between 2001 and 2003 from about 11.5 to between
            13 and 14.5 percent, but it has held steady in 2004 and
            2005. This places Russia's tariffs at a level slightly
            higher than other middle-income countries and considerably
            higher than the OECD countries. The trade weighted standard
            deviation of the tariff approximately doubled from 9.5
            percent in 2001 to 18 percent in 2003, but then fell to 15.2
            percent by 2005. The food sector and light industry are the
            aggregate sectors with the highest tariff rates-their tariff
            rates in 2005 were 23.1 percent and 19.5 percent on a
            trade-weighted basis, but the increase in their tariffs has
            not led to an increase in their output.
The Economic Community of West
            African States : fiscal revenue implications of the
            prospective economic partnership agreement with the European Union
This paper applies a partial equilibrium
            model to analyze the fiscal revenue implications of the
            prospective economic partnership agreement between the
            Economic Community of West African States (ECOWAS) and the
            European Union. The authors find that, under standard import
            price and substitution elasticity assumptions, eliminating
            tariffs on all imports from the European Union would
            increase ECOWAS' imports from the European Union by
            10.5-11.5 percent for selected ECOWAS countries, namely Cape
            Verde, Ghana, Nigeria, and Senegal. This increase in imports
            would be accompanied by a 2.4-5.6 percent decrease in total
            government revenues, owing mainly to lower fiscal revenues.
            Tariff revenue losses should represent 1 percent of GDP in
            Nigeria, 1.7 percent in Ghana, 2 percent in Senegal, and 3.6
            percent in Cape Verde. However, the revenue losses may be
            manageable because of several mitigating factors, in
            particular the likelihood of product exclusions, the length
            of the agreement's implementation period, and the scope
            for reform of exemption regimes. The large
            country-by-country differences in fiscal revenue loss
            suggest that domestic tax reforms and fiscal transfers
            within ECOWAS could be important complements to the
            agreement's implementation.
Yield impact of irrigation
            management transfer : story from the Philippines
Irrigation management transfer is an
            important strategy among donors and governments to
            strengthen farmer control over water and irrigation
            infrastructure. This study seeks to understand whether
            irrigation management transfer is meeting the promise of its
            commitments. The authors use data from a survey of 68
            irrigator associations and 1,020 farm households in the
            Philippines to estimate the impact of irrigation management
            transfer on irrigation association performance and on rice
            yields. They also estimate a stochastic frontier production
            function to assess contributions to technical efficiency.
            There are three main results. First, the presence of
            irrigation management transfer is associated with an
            increase in maintenance activities undertaken by irrigation
            associations. Second, by increasing local control over water
            delivery, the presence of irrigation management transfer is
            associated with a 2-6 percent increase in farm yields. Rice
            production in irrigation management transfer areas is
            greater even after controlling for various differences among
            rice farmers in transfer and non-transfer areas. Third,
            irrigation management transfer is, at a minimum,
            poverty-neutral, and may even give the asset-poor a small
            boost in terms of rice yields. The authors speculate that
            this boost may be a result of increased timeliness of water
            delivery and better resolution of conflicts related to
            illegal use.
India's journey toward an
            effective patent
The decade following India's
            accession to the World Trade Organization's
            Trade-Related Aspects of Intellectual Property ushered in
            numerous changes to the country's patent system,
            culminating in a series of amendments in 2005.  But a
            functioning patent system is more than a statute.  This
            paper discusses the steps that India must still take to
            develop an effective, functioning patent system capable of
            attracting foreign direct investment, motivating domestic
            innovation and education, and filtering its benefits to all
            elements of Indian society, including the poor and the
            possessors of traditional knowledge.  The analysis combines
            data studies of historical and recent patenting activity in
            India and by Indians, interviews with Indian government
            officials, intellectual property attorneys, industrialists,
            and researchers, and lessons gleaned from patent systems
            abroad.  It identifies critical needs and concrete steps to
            meet them.  Improving public awareness of the
            revenue-generating potential of patents will enhance
            incentives for the participation of individuals and small
            and medium enterprises in the patent system. Formalizing
            guidelines for patents derived through government research
            funds-coupled with needed changes in institutional
            governance-will enhance prospects for technology transfer
            from laboratories to commercial markets. Compensation
            schemes for traditional knowledge will extend the benefits
            of intellectual property rights to the poorest members of
            society.  This paper's recommendations would help India
            achieve both a fully functioning patent system and a
            mechanism for ensuring that poor people living traditional
            lifestyles receive their share of the social gains that a
            working innovation system can confer.
The impact of climate change on
            African agriculture : a ricardian approach
This paper uses the Ricardian approach
            to examine how farmers in 11 countries in Africa have
            adapted to existing climatic conditions. It then estimates
            the effects of predicted changes in climate while accounting
            for whatever farmer adaptation might occur. This study
            differs from earlier ones by using farmers' own
            perceptions of the value of their land. Previous research,
            by contrast, has relied on either observed sale prices or
            net revenues, sometimes aggregated over geographically large
            tracts of terrain. The study also makes use of high
            resolution data describing soil quality and runoff.
            Furthermore, it tackles the challenges involved in modeling
            the effect of climate on agriculture in a study that
            includes countries in the northern and southern hemispheres,
            as well as the tropics. The study confirms that African
            agriculture is particularly vulnerable to climate change.
            Even with perfect adaptation, regional climate change by
            2050 is predicted to entail production losses of 19.9
            percent for Burkina Faso and 30.5 percent for Niger. By
            contrast, countries such as Ethiopia and South Africa are
            hardly affected at all, suffering productivity losses of
            only 1.3 percent and 3 percent, respectively. The study also
            confirms the importance of water supplies as measured by
            runoff, which, being affected by both temperature and
            precipitation, may itself be highly sensitive to climate change.
Crop selection : adapting to climage
            change in Africa
This paper examines whether the choice
            of crops is affected by climate in Africa. Using a
            multinomial logit model, the paper regresses crop choice on
            climate, soils, and other factors. The model is estimated
            using a sample of more than 7,000 farmers across 11
            countries in Africa. The study finds that crop choice is
            very climate sensitive. For example, farmers select sorghum
            and maize-millet in the cooler regions of Africa;
            maize-beans, maize-groundnut, and maize in moderately warm
            regions' and cowpea, cowpea-sorghum, and
            millet-groundnut in hot regions. Further, farmers choose
            sorghum, and millet-groundnut when conditions are dry;
            cowpea, cowpea-sorghum, maize-millet, and maize when medium
            wet; and maize-beans and maize-groundnut when wet. As
            temperatures warm, farmers will shift toward more heat
            tolerant crops. Depending on whether precipitation increases
            or decreases, farmers will also shift toward drought
            tolerant or water loving crops, respectively. There are
            several policy relevant conclusions to draw from this study.
            First, farmers will adapt to climate change by switching
            crops. Second, global warming impact studies cannot assume
            crop choice is exogenous. Third, this study only examines
            choices across current crops. Future farmers may well have
            more choices. There is an important role for agronomic
            research in developing new varieties more suited for higher
            temperatures. Future farmers may have even better adaptation
            alternatives with an expanded set of crop choices
            specifically targeted at higher temperatures.
Who fears competition from informal
            firms evidence from Latin America
This paper investigates who is most
            affected by informal competition and how regulation and
            enforcement affect the extent and nature of this
            competition. Using newly-collected enterprise data for 6,466
            manufacturing formal firms across 14 countries in Latin
            America, the authors show that formal firms affected by
            head-to-head competition with informal firms largely
            resemble them. They are small credit constrained,
            underutilize their productive capacity, serve smaller
            customers, and are in markets with low entry costs.  In
            countries where the government is effective and business
            regulations onerous, formal firms in industries
            characterized by low costs to entry feel the sting of
            informal competition more than in other business
            environments. Finally, the analysis finds that in an economy
            with relatively onerous tax regulations and a government
            that poorly enforces its tax code, the percentage of firms
            adversely affected by informal competition will be reduced
            from 38.8 to 37.7 percent when the government increases
            enforcement to cover all firms.
Managing the coordination of service
            delivery in metropolitan cities : the role of metropolitan governance
This paper examines different models of
            governing structure found in metropolitan areas around the
            world. It evaluates how well these models achieve the
            coordination of service delivery over the entire
            metropolitan area as well as the extent to which they result
            in the equitable sharing of costs of services. Based on
            theory and case studies from numerous cities in developed
            and less developed countries, the paper concludes that there
            is no "one size fits all" model of metropolitan
            governance. Other observations from the case studies
            highlight the importance of the process of implementing a
            metropolitan structure, the need to match fiscal resources
            with expenditure responsibilities, the need to have a
            governance structure that covers the entire economic region,
            and the critical importance of having a strong regional
            structure that ensures that services are delivered in a
            coordinated fashion across municipal boundaries.
Managing agricultural risk at the
            country level : the case of index-based livestock insurance
            in Mongolia
This paper describes the index-based
            livestock insurance program in Mongolia designed in the
            context of a World Bank lending operation with Government of
            Mongolia and implemented on a pilot basis in 2005.  This
            program involves a combination of self-insurance by herders,
            market-based insurance, and social insurance. Herders retain
            small losses, larger losses are transferred to the private
            insurance industry, and extreme or catastrophic losses are
            transferred to the government using a public safety net
            program.  A syndicate pooling arrangement protects
            participating insurance companies against excessive insured
            losses, with excess of loss reinsurance provided by the
            government.  The fiscal exposure of Government of Mongolia
            toward the most extreme losses is protected with a
            contingent credit facility.  The insurance program relies on
            a mortality rate index by species in each local region.  The
            index provides strong incentives to individual herders to
            continue to manage their herds so as to minimize the impacts
            of major livestock mortality events; individual herders
            receive an insurance payout based on the local mortality,
            irrespective of their individual losses.  This project
            offered the first opportunity to design and implement an
            agriculture insurance program using a country-wide
            agricultural risk management approach.  During the first
            sales season, 7 percent of the herders in the three pilot
            regions purchased the insurance product.
Urbanization and productivity :
            evidence from Turkish provinces over the period 1980-2000
Since the early 1980s, Turkey has been
            going through a rapid urbanization process at a pace beyond
            the World average. This paper aims at assessing the impact
            of this rapid urbanization process on the country's
            sector productivity. The authors built a database combining
            two-digit manufacturing data and some geographical,
            infrastructural, and socio-economic data collected at the
            provincial level by the Turkish State Institute of
            Statistics. The paper develops a parsimonious econometric
            relation linking sector productivity to accessibility,
            localization, and urbanization economies, proxying variables
            in the tradition of the New Economic Geography literature.
            The estimation results suggest that both localization and
            urbanization economies, as well as market accessibility, are
            productivity-enhancing factors in Turkey, although the
            causation link between productivity and these agglomeration
            measures is not clearly established. The sector-by-sector
            estimation confirms this result, although the localization
            economies effect is negative for the non-oil mineral sector,
            and the urbanization economies effect is weak for
            natural-resource-based sectors such as the wood and metal
            industry. Although the data cover the period up to 2000 and
            thus ignore the financial crisis that hit Turkey in 2001,
            the current structural transformation of the country away
            from the agricultural sector gives room to use the insights
            of these results as a preliminary step to understand the new
            challenges faced by the Turkish manufacturing sector. The
            results provide a discussion base to revisit the policy
            agenda on the improvement of the accessibility to markets,
            the improvement of the business environment to ease the
            creation and development of new firms, and a well-managed
            urbanization process to tap in the economic potential of cities.
New evidence on the urbanization of
            global poverty
The authors provide new evidence on the
            extent to which absolute poverty has urbanized in the
            developing world, and the role that population urbanization
            has played in overall poverty reduction. They find that
            one-quarter of the world's consumption poor live in
            urban areas and that the proportion has been rising over
            time. By fostering economic growth, urbanization helped
            reduce absolute poverty in the aggregate but did little for
            urban poverty. Over 1993-2002, the count of the "$1 a
            day" poor fell by 150 million in rural areas but rose
            by 50 million in urban areas. The poor have been urbanizing
            even more rapidly than the population as a whole. Looking
            forward, the recent pace of urbanization and current
            forecasts for urban population growth imply that a majority
            of the poor will still live in rural areas for many decades
            to come. There are marked regional differences: Latin
            America has the most urbanized poverty problem, East Asia
            has the least; there has been a "ruralization" of
            poverty in Eastern Europe and Central Asia; in marked
            contrast to other regions, Africa's urbanization
            process has not been associated with falling overall poverty.
Sovereign natural disaster insurance
            for developing countries : a paradigm shift in catastrophe
            risk financing
Economic theory suggests that countries
            should ignore uncertainty for public investment and behave
            as if indifferent to risk because they can pool risks to a
            much greater extent than private investors can.  This paper
            discusses the general economic theory in the case of
            developing countries. The analysis identifies several cases
            where the government's risk-neutral assumption does not
            hold, thus making rational the use of ex ante risk financing
            instruments, including sovereign insurance.  The paper
            discusses the optimal level of sovereign insurance.  It
            argues that, because sovereign insurance is usually more
            expensive than post-disaster financing, it should mainly
            cover immediate needs, while long-term expenditures should
            be financed through post-disaster financing (including ex
            post borrowing and tax increases).  In other words,
            sovereign insurance should not aim at financing the
            long-term resource gap, but only the short-term liquidity need.
Atmospheric stabilization of CO2
            emissions : near-term reductions and intensity-based targets
This study analyzes CO2 emissions
            reduction targets for various countries and geopolitical
            regions by the year 2030 in order to stabilize atmospheric
            concentrations of CO2 at the level of 450 ppm (550 ppm
            including non CO2 greenhouse gases). It also determines CO2
            intensity cuts that would be needed in those countries and
            regions if the emission reductions were achieved through
            intensity-based targets while assuming no effect on
            forecasted economic growth. Considering that the
            stabilization of CO2 concentrations at 450 ppm requires the
            global trend of CO2 emissions to reverse before 2030, this
            study develops two scenarios: reversing the global CO2 trend
            in (i) 2020 and (ii) 2025. The study shows that global CO2
            emissions would be 42 percent above the 1990 level in 2030
            if the increasing trend of global CO2 emissions is reversed
            by 2020. If reversing the trend is delayed by 5 years, the
            2030 global CO2 emissions would be 52 percent higher than
            the 1990 level. The study also finds that to achieve these
            targets while maintaining assumed economic growth, the
            global average CO2 intensity would require a 68 percent drop
            from the 1990 level or a 60 percent drop from the 2004 level
            by 2030.