Globalization and domestic conflict |
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Authors: | Michelle R. Garfinkel Constantinos Syropoulos |
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Affiliation: | a Department of Economics, 3151 Social Science Plaza, University of California-Irvine, Irvine, CA 92697-5100, United States b Department of Economics and International Business LeBow College of Business-Drexel University, 503-N Matheson Hall, 32nd and Market Streets, Philadelphia, PA 19104, United States |
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Abstract: | When a resource like oil is domestically contested, trade patters and welfare can be very different than when property rights are costlessly enforced. Whereas (small-country) importers of the contested resource gain unambiguously relative to autarky, exporters of the contested resource lose under free trade, unless the world price of the resource is sufficiently high. Regardless of what price obtains in world markets, countries tend to over-export the contested resource compared to the absence of conflict. For a wide range of prices, higher international prices of the contested resource reduce welfare, an instance of the “natural resource curse.” |
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Keywords: | Trade openness Property rights Enforcement Insecurity Civil wars |
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