Natural Resource Rents, Institutional Quality and Internal Conflict

Abstract

In this study we explore the impact of natural resource rents on internal conflicts. Besides this, in our study, we develop a framework for analyzing the impact of natural resources rent on internal conflicts in the presence of quality of government institution. The study used panel dataset of 70 countries for the period 1991 to 2016. Panel estimation techniques Fixed effect and Random effect are used for estimating the impact of natural resource rents on internal conflicts. This study shows that there is positive association between natural resource rents and internal conflicts. We have checked this relationship for global sample, developed countries and developing countries separately. And for each sample positive relation exists between these two variables. After this we find that what happens to this aforementioned relationship in the presence of institutional quality. This effect is captured by introducing the interactive term of natural resource rent and institutional quality in regression models. The Results show that for each set of data i.e. global sample, developed countries and developing countries, relationship between interactive term and internal conflicts is negative. It depicts that internal conflicts resulting from natural resource abundance is reduced in the presence of better quality of government institutions.