Is There an Arab Exceptionalism When It Comes to Conflict?

C. Breisinger, J.-F. Maystadt, P. Al-Riffai and J.-F. Trinh Tan

Presented by

Jean-Francois Maystadt

IFPRI-UNESCWA Conference: Food Secure Arab World—A Roadmap for Policy & Research

United Nations Economic and Social Commission for Western Asia; Beirut, 6-7 February 2012

“How is it that countries in the Middle East and North Africa could face explosions of popular grievances despite, in some cases, sustained high growth and improvement in social indicators?”

(World Development Report 2011 on Conflict, Security and Development)

1. Conflicts in the Arab world

The Arab World at a crossroad

• “Power vacuum” : Particularly at risk

• But no determinism … also opportunities

Major causes of conflicts and which preventive measures?

How best to accompany such political transition?

2. Conceptual framework ‘Motivation’

Grievances, Inequality, Polarization, etc.

‘Opportunity’

Opportunity cost to participate to violence depends on alternative sources of income, the potential loss and rewards (therefore capacity for leaders to finance)

‘Polity’

Poor governance and lack of political inclusion

State capacity to repress or “pay for peace”

3. Arab Exceptionalism? Collier and Hoeffler (2004, OEP)

• ‘Opportunity’ (per capita income, economic growth) matters, not ‘Motivation’ (‘grievance’)

Sorli et al. (2005, JCR) : 1960-2000

• No MENA specific effect : “Conflict is quite well explained by a general model of civil war” (p.160)

Shortcomings:

• Reduced sample of countries (excl. e.g. Mauritania, Djibouti, Somalia, Sudan)

• No Fixed Effect (Djankov and Reynal-Querol, forthcoming REStat)

• Predictive power 30% lower compared to SSA

4. Arab exceptionalism: a puzzle Collier and Hoeffler framework is found to be too

limited: Something specific to the Arab world needs to be explained !

Puzzling economic growth effect

Possible explanations?

Omitted variables: institutions inherited from the past, historical grievances, … (country fixed effects)

Where the growth is coming from? (‘Opportunity’)

Sectoral growth, Youth bulges

Better proxy for natural resource dependency (e.g. oil)

Where the growth is going to? (‘Motivation’)

Inequality

Micro and Macro Food Security Index (FSI)

Political dimension? (‘Polity’)

Main empirical model 𝑃(𝑐𝑜𝑛𝑓𝑙𝑖𝑐𝑡𝑖,𝑡) = 𝑐 + 𝛼𝑖 + 𝜙𝑡 + 𝜂 𝑋𝑖,𝑡−1 + 𝜑 𝑋𝑖𝑡−1 ∗ 𝐴𝑟𝑎𝑏 + 𝜀𝑖,𝑡

Economic growth is the only robust finding in Collier and Hoeffler (2004)

Arab exceptionalism is confirmed!

‘Opportunity’

Sectoral growth does not matter

Youth bulges (share of urban male aged 15-24 over the urban (or male) population aged > 15) : no region-specific effect

Oil, gas, ores and minerals exports to GDP or dependency (>40%) . Oil dependency increases conflict in a non-monotonic way but the effect is totally driven by the Arab world

Main empirical model

𝑃(𝑐𝑜𝑛𝑓𝑙𝑖𝑐𝑡𝑖,𝑡) = 𝑐 + 𝛼𝑖 + 𝜙𝑡 + 𝜂 𝑋𝑖,𝑡−1 + 𝜑 𝑋𝑖𝑡−1 ∗ 𝐴𝑟𝑎𝑏𝑖 + 𝜀𝑖,𝑡

‘Motivation’

Gini coefficient is uncorrelated to conflicts but known to poorly capture time-varying sources of grievances

Macro and Micro Food Security Indexes significantly increase the risk of major conflicts in Arab world

‘Polity’ Economic and political discrimination against minorities

increase conflicts but not specifically for Arab countries

Past transitions to full democracy and autocracy reduce the risk of conflicts (using policyIV data, Persson and Tabellini 2006 AER)

Beyond Collier-Hoeffler framework (1) (2) (3a) (3b) (4) (5)

Major Major Major Major Major Major

Conflict Conflict Conflict Conflict Conflict Conflict

GDP growth (t-1) -0.120** -0.197*** -0.0722 -0.25 -0.048 -0.0413

[0.0516] [0.0660] [0.170] [0.119] [0.0809] [0.0839]

GDP growth*MENA (t-1) 0.265*** 0.727 0.373*** 0.113 0.252

[0.079] [0.689] [0.129] [0.219] [0.161]

Child stunting (t-1) 0.000428 0.0000146

[0.00143] [0.00141]

Child stunting*MENA 0.0119* 0.0111*

[0.007] [0.0068]

Child mortality (t-1) 0.000134

[0.0002]

Child Mortality*MENA 0.0008

[0.0005]

P-value (0.128)

Food security index (t-1) -0.0407

[0.0462]

Food security index*MENA 0.412*

[0.216]

Time dummies YES YES YES YES YES YES

Country Fixed Effects YES YES YES YES YES YES

Observations 4,896 4,896 536 2,616 1,456 2,958

Number of ccode 140 140 130 130 139 131

Beyond Collier-Hoeffler framework (6) (7) (8) (9)

Major Major Major Major

Conflict Conflict Conflict Conflict

GDP growth (t-1) -0.339** -0.335** -0.116* -0.117*

[0.139] [0.143] [0.0623] [0.0621]

GDP growth*MENA (t-1) 0.437*** 0.434** 0.180** 0.117

[0.158] [0.175] [0.0791] [0.0958]

Oil rents (t-1) 0.00265

[0.00227]

Oil rents*MENA (t-1) -0.00847*

[0.00445]

Oil rents squared (t-1) -3.81E-05

[3.33e-05]

Oil rents squared*MENA 0.000114**

[5.00e-05]

Oil dependency (t-1) -0.00876

[0.0298]

Oil dependency*MENA 0.0902*

[0.0486]

Pol. Transition to democracy (t-1) -0.00337***

[0.00103]

Pol. Transition to democracy*MENA -0.0256***

[0.00849]

Pol. Transition to autocracy (t-1) -0.0019

[0.00218]

Pol. Transition to autocracy*MENA -0.0189***

[0.00637]

Time dummies YES YES YES YES

Country Fixed Effects YES YES YES YES

Observations 2,087 2,087 4,452 4,461

Number of ccode 73 73 131 131

The Arab Food Security channel

For the sample restricted to the Arab world, 2SLS-FE model points to the vulnerability of food net importers to changes in food international prices for food insecurity and in turn, to the risk of conflict

𝑃 𝑐𝑜𝑛𝑓𝑙𝑖𝑐𝑡𝑖,𝑡 = 𝑐 + 𝛼𝑖 + 𝜙𝑡 + 𝜂 𝐹𝑆𝐼𝑖,𝑡 + 𝜀𝑖,𝑡

𝐹𝑆𝐼𝑖,𝑡 = 𝑐 + 𝛼𝑖 + 𝜙𝑡 + 𝜂 𝑃𝑗,𝑡 ∗ 𝑊𝑖,𝑗 + 𝜀𝑖,𝑡

Where 𝐹𝑆𝐼𝑖,𝑡 = Macro and Micro Food Security Indexes

𝑃𝑗,𝑡 = 𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑓𝑜𝑜𝑑 𝑗

𝑊𝑖,𝑗 = net food imports

The Arab Food Security Channel (1) (2) (3)

Dep. Var. Major Major Major

Conflict Conflict Conflict

Child stunting 0.0464***

[0.0176]

Child mortality 0.0139***

[0.00493]

Food security index 1.444**

[0.613]

GDP growth 0.22 -0.112 0.185*

(t-1) [0.206] [0.280] [0.0956]

Dep. Var. Child stunting Child mortality Food security index

Food Import Price Index 0.0545*** 0.162*** 0.00104***

[0.0129] [0.0547] [0.000260]

GDP growth -3.343 16.25 -0.022

(t-1) [2.608] [13.82] [0.0410]

Time Dummies YES YES YES

Country Fixed effects YES YES YES

Observations 433 257 549

Number of countries 22 24 22

First-stage

Second-stage

Preliminary conclusions 1) Transition to democracy is welcomed but the

transition period is risky

Identifying the risk of conflicts is crucial, at a particularly challenging time in history

2) Food insecurity matters for conflicts in the Arab world

Avoid fiscally unsustainable and not well targeted measures (e.g. subsidies)

Smart mix of policies, investments and targeted programs in the areas of trade, agriculture, water, health and education

Need pro-poor and pro-nutrition growth (see IFPRI Food Policy report “Beyond the Arab Awakening”)

3) Oil dependency increases the risk of conflict but could create fiscal space and could in principle be wealth enhancing

How to use oil revenues? ‘Paying for peace’ has become unsustainable, given

increased repression (e.g. social media) and redistribution costs (e.g. youth and food prices)

Many Arab countries show “Dutch disease” symptoms, including low economic diversification and governance issues

Oil rents should be directed to pro-poor growth enhancing investments, such as infrastructure and education, and to targeted transfers to the most food insecure populations

Ways forward

1. Not a paper on the Arab Awakening : only valid for major conflict events

• Need for a conceptual framework aiming at understanding the dynamics of public protests and violence in the Arab countries, with a special focus on food security and food policies (e.g. subsidies)

2. Cross-country analysis misses the heterogeneity

• Weather shocks and violence in Somalia and South Sudan. Preliminary results stress the importance of the livestock markets in Somalia

• Protests in Egypt and food policies (nutrition puzzle)

• The developmental costs of conflict in Yemen