Butter, Guns and Ice-Cream, Theory and Evidence from Sub-saharan Africa

Raul Caruso, Università Cattolica del Sacro Cuore, Istituto di Politica Economica

Abstract

This paper is intended to complement the existing literature on civil wars. First, it presents a simple theoretical model of conflict which defines a two-sector economy. In a contested sector two agents struggle to appropriate the maximum possible fraction of a contestable output. In an uncontested sector, they hold secure property rights over the production of some goods. Agents split their resource endowment between ‘butter’, ‘guns’ and ‘ice-cream’. Following the theoretical insights the empirical analysis focuses on the relationship between civil wars and different sectors of the economy. In particular, a panel probit specification shows that the incidence of a civil war decreases in the size of manufacturing sector. [forthcoming on Defence and Peace Economics]