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The Economics of ConflictTheory and Empirical Evidence$
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Karl Wärneryd

Print publication date: 2014

Print ISBN-13: 9780262026895

Published to MIT Press Scholarship Online: September 2014

DOI: 10.7551/mitpress/9780262026895.001.0001

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Natural Resources, Social Conflict, and Poverty Trap

Natural Resources, Social Conflict, and Poverty Trap

(p.41) 3 Natural Resources, Social Conflict, and Poverty Trap
The Economics of Conflict

Davide Fiaschi

The MIT Press

Countries with output concentrated in primary sectors often exhibit low growth rates. This chapter identifies the cause of stagnation of these economies where a high level of social conflict due to the abundance of natural resources occurs in the presence of an initially low level of per capita GDP, a high social fractionalization, weak institutions, low investment rates, high population growth, high depletion of natural resources, and low life expectancy. It presents a theoretical model that provides a rationale for the high persistence of negative shocks in poor economies, as well as for the observed long-run impact of natural disasters. The model attempts to identify conditions under which countries can be trapped into a permanent underdevelopment regime.

Keywords:   economic stagnation, social conflict, negative shocks, primary sector, underdevelopment, economic development

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