Natural Resource Rents, Institutions and Political Violence: A Theoretical Exploration

Abstract

Abstract Natural resource abundance has been linked to major violent conflicts in the world. Collier and Hoeffler (1998) were the first to discuss distributional concerns among different groups and its potential in instigating violence in the presence of natural resources. This work traces the theories that link natural resource rents to violence and develops a theoretical framework which can explain the role institutional accountability and third-party interference in that relationship. We have considered the dynamics between the dominant and minority groups in determining the shares in natural resources and then have adapted the framework by Elbadawi and Soto (2015) for explaining the motivation for exploitation and rebellion. Onwards, we modify the framework by incorporating institutional cost and third-party interference into the baseline analysis. The derived outcomes depict that indiscriminate institutional accountability for exploitation and aggression can be instrumental in neutralizing the effect of natural resource rents on political violence. Further, the effectiveness of institutional cost of violence is compromised in case of third-party interference. Our work makes a case for not only institutional reforms that would penalize exploitation and violence but also for a less conflictual foreign policy for a developing nation.