International commodity prices and the persistence of civil conflict
We develop a general equilibrium model to analyse the impact of the international commodity prices on civil conflict. We focus on the specific labour market context of underdeveloped rural sub-Saharan African areas where highly valuable and easily appropriable natural resources constitute the only alternative economic assets to tropical agricultural commodities. We show that not only the price of mineral resources matters. Prices of tropical agricultural commodities matter just as much: a drop in those prices increases the attractiveness of other ‘economic’ activities such as rebellion/warfare and can, therefore, trigger civil conflict. Furthermore, we show that the occurrence of civil war may carry a non-reversible component within it: due to its destructive nature on agricultural productivity, civil war lowers market wages, thus increasing the mining profits and lowering the threshold mineral prices below which conflict is not lucrative.
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