Many governments and international experts consider a move towards high-value export crops, such as fruits and vegetables, as an important opportunity for economic growth and poverty reduction. Little is known, however, about the effects of export crops in fragile and conflict affected countries. We exploit movements in world market prices combined with geographic variation in crop intensity to provide evidence that increases in the value of a major export crop exacerbate conflict violence in the Philippines. We further show that this effect is concentrated in areas with low baseline insurgent control. In areas with high insurgent control, a rise in crop value leads to a decrease in violence but a further expansion of rebel-controlled territory. These results are consistent with the hypothesis that insurgents gain strength from extorting agricultural exporters and that insurgent strength has a non- monotonic effect on conflict violence because strong insurgent groups can establish local monopolies of violence.
Year: 2016 HiCN Working Paper No. 228