Working Paper: NBER ID: w11219
Authors: joshua d angrist; adriana d kugler
Abstract: Natural and agricultural resources for which there is a substantial black market, such as coca, opium, and diamonds, appear especially likely to be exploited by the parties to a civil conflict. On the other hand, these resources may also provide one of the few reliable sources of income in the countryside. In this paper, we study the economic and social consequences of a major shift in the production of coca paste from Peru and Bolivia to Colombia, where most coca leaf is now harvested. This shift, which arose in response to the disruption of the "air bridge" that previously ferried coca paste into Colombia, provided an exogenous boost in the demand for Colombian coca leaf. Our analysis shows this shift generated economic gains in rural areas, primarily in the form of increased self-employment earnings and increased labor supply by teenage boys. There is little evidence of widespread economic spillovers, however. The results also suggest that the rural areas which saw accelerated coca production subsequently became much more violent. Taken together, these findings support the view that the Colombian civil conflict is fueled by the financial opportunities that coca provides. This is in line with a recent literature which attributes the extension of civil conflicts to economic rewards and an environment that favors insurgency more than to the persistence of economic or political grievances.
Keywords: coca; civil conflict; economic consequences; Colombia
JEL Codes: O1; R0; Q0; J2; K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased coca cultivation (Q15) | Increased self-employment earnings (J39) |
| Increased coca cultivation (Q15) | Increased labor supply among teenage boys (J49) |
| Increased coca cultivation (Q15) | Increased violence (D74) |
| Increased coca cultivation (Q15) | Higher homicide rates (R28) |
| Disruption of the air bridge (L93) | Increased coca cultivation (Q15) |
| Disruption of the air bridge (L93) | Increased self-employment earnings (J39) |
| Disruption of the air bridge (L93) | Increased labor supply among teenage boys (J49) |