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Coffee prices, oil prices, and violence in Colombia October 23, 2008

Posted by jasonized in study.
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Conflict is affected by commodity prices. That’s the empirical result of a fascinating study that shows how changes in world prices of coffee and oil correlated with rises and decreases in violence in Colombia.

Via Dani Rodrik:

When farm prices (or those of other labor-intensive resources) go up, the benefits are widespread, and many laborers see their incomes increase accordingly. But higher oil prices bring gains only to the privileged few who own the wells (and perhaps also their relatively small workforce), leading to even greater conflict over who controls the increasingly valuable oil.

The empirical analysis by Dube and Vargas shows that exactly this pattern holds.  When world prices for coffee and oil rise, there is less violence in the country’s coffee regions and more violence in oil regions.  This is a very neat piece of work that greatly enhances our understanding of the economics of conflict.