AbstractThis thesis explores the impact of economic shocks on conflict focusing on two understudied areas in conflict and conflict resolution studies, namely economic sanctions and economic hardship due to adverse climate conditions.
Chapter I presents a game theory model of sanctions to assess their effectiveness by focusing on firm level response to sanctions. We show that sanctions might concentrate the market of the target country and benefit certain firms. We extend the model in several ways to account for the role of ideology in political preferences, to consider the government’s objective of staying in power and to account for the possibility that organized groups who stand to gain/lose from sanctions invest in shifting people’s ideological stance towards their preferred position. Under all these assumptions we show that sanctions might be ineffective even when they generate an overall cost to the targeted country. This is due to a shift of market share to more productive firms, the possible political importance of certain segments of the population or higher spending by them in order to shift the public opinion.
Chapter II empirically tests for the impact of sanctions on market structure of the target country using the case of Iran sanctions. Using the Tehran Stock Exchange data, we find that sanctions have a significant impact on market concentration and that the impact is stronger within the trade-reliant industries.
Chapter III provides a test of the impact of economic shocks on conflict in rural Ethiopia that is a highly vulnerable place to adverse climate conditions. Reduced production due to lack of rain in a rain fed agricultural economy might affect the opportunity cost of participating in violence and increase the probability of conflict. Our empirical tests show that lower precipitation levels are associated with higher probability of conflict in rural Ethiopia. Using a two-stage estimation method we also find support for the hypothesis that the observed link between precipitation and conflict is transmitted through production levels.
|Date of Award
|1 Apr 2019
|Amrita Dhillon (Supervisor) & Elisa Cavatorta (Supervisor)