Nov 2012 | 97

Authors: Rick Van der Ploeg

The political economy of natural resource extraction is analysed in three different contexts. First, if an incumbent faces a threat of being removed once and for all by a rival faction, extraction becomes more voracious, especially if the rebel faction shares rents much more than the incumbent. Second, perennial political conflict cycles are more inefficient if cohesiveness of the constitution or the partisan in-office bias is large and political instability is high. Third, resource wars are more intense if the political system is less cohesive, there is a partisan in-office bias of the incumbent, oil reserves are high, the wage is low, governments can be less frequently removed from office, and fighting technology has less decreasing returns to scale. Resource depletion in such wars is more rapacious if there is more government instability, the political system is less cohesive, and the partisan in-office bias is smaller.

JEL Codes: D81, H20, Q31, Q38

Keywords: political conflict; cohesiveness; partisan bias; dynamic resource wars; contests; rapacious depletion; exploitation investment; hold-up problem

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