A Non-Linear Approach of Natural Resources Rents on Internal Conflicts
Dief Reagen Nochi Faha  1@  
1 : CREM  (CREM)  -  Website
Universté de Rennes, CREM UMR CNRS 6211, CNRS : UMR6211
7 Place Hoche 35000 Rennes -  France

This paper investigates the non-linear effect of natural resources rents on internal conflicts in 60 natural resources countries over the period 1984-2016 using a Panel Smooth Transition Regression approach. Data used in this study is obtained from International country Risk Guide and WDI of the World Bank. Results suggest that using a linear panel model we obtain no effect of natural resources rent on internal conflicts. However, when we estimate using a PSTR model we obtained a positive and significant effect of natural resources rent on conflict in the first and second regime. This indicates that in the first regime, the effect of natural resources becomes positive due a gradually (smooth) increases over the transition function. Likewise, we observe a positive effect in the second regime. Moreover, the effect becomes negative above the threshold level of 17.212 indicating a non-linear effect. They study thus indicate that natural resources can also be used to reduce conflict and should not only be considered as a curse. There is need to adequately chose the specification and techniques in macroeconomics because it's difficult to observe linear economic phenomena.


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