Economic Grievances and Civil War: An Application to the Resource Curse

Abstract A large body of scholarship suggests that economic grievances play an important role in civil wars. But what specific economic activities trigger such grievances, and why would governments not take proactive steps to limit economic grievances in order to stabilize their regimes? This article argues that specific economic activities—those that undermine a producer’s ability to exit the formal economy—cause governments to make taxation decisions that, despite the costliness of fighting, increase the likelihood of civil war. An inability for producers to exit the formal economy also undermines regional autonomy deals by encouraging governments to grab short-term rents despite the risk of triggering civil war. After deriving this “redistributive grievance” mechanism by analyzing an infinite-horizon bargaining model with endogenous labor supply and economic production, I address a specific empirical source of such redistributive grievances: oil-rich regions fight separatist civil wars relatively frequently. Capital-intense, geographically concentrated, and immobile oil production corresponds with conditions in the formal model that predict redistributive grievances and war. Moreover, I argue that applying the redistributive grievances mechanism to understanding the oil-separatism relationship also highlights shortcomings of alternative “greed”-based explanations.