Conflict and Development

Abstract

We examine a dynamic two-stage incumbent-challenger model of internal conflict, where the government, i.e., the incumbent, is in power, while the rebel challenges the government in a bid to capture state power. The central issue is the trade-off between development and security-based measures in countering such rebellion activity. We find that while an exogenous increase in development decreases the level of rebellion activity, it increases the level of security-based measures by the government whenever the rebel is ‘dominant’ to begin with. Further, if the rebel is dominant, then, with the rebel becoming stronger (i.e., becoming more cost efficient), the level of rebel activity increases, while the security-based measures by the government is lowered. Thus, our analysis suggests that the trade-off is a nuanced one. This framework also allows us to reconcile some divergent results in the empirical literature regarding the effect of development works on conflict.