Conflict or compromise : theory and evidence from Africa and Asia

Civil wars are a recurring phenomenon undermining development in weak states. Faced with the possibility of costly conflict, why don’t leaders share power? I investigate the role of an unexplored commitment problem, both theoretically and empirically. The model features a leader who can appease challengers by sharing power, but doing so increases their effectiveness at launching a rebellion. I show that commitment worsens as the opposition becomes stronger, and derive testable non-monotonic implications of group strength and distributional shocks on power-sharing and conflict. As challengers become stronger, the likelihood of inclusion (positive transfers) increases up to a threshold, beyond which the leader prefers to exclude an opposing group and face conflict. I test the model using data on politically relevant ethnic groups in Africa and Asia, their access to executive power, and armed organizations claiming to represent them. To that end, I use three complementary strategies: (i) within-country variation in population share to proxy for group strength; (ii) quasi-randomly split groups across countries; and (iii) conflict-inducing distributional economic shocks within a country, by combining geo-referenced data on the ethnic homelands, cropland maps and international prices. The empirical findings strongly accord with predictions of the theory. I then structurally estimate the model parameters and explore policy relevant counterfactuals, including the effects of democratization, changes in military capacity, financial aid, sanctions and quotas.