Conflict and fiscal capacity

We examine the role of war in retarding state fiscal capacity in developing countries, measured by tax revenue ratios to GDP. We build a simple theoretical model of a factionalized state, where patronage substitutes for common interest public goods, along with violent contestation over a rent or prize. Our dynamic panel empirical analysis applied to 79 developing countries, during 1980–2010, indicates that war, especially civil war, retards fiscal capacity, along with imperfect democracy, political repression, poor governance, and dependence on oil and macroeconomic mismanagement. High intensity conflict is particularly destructive of state capacity. In countries experiencing low intensity wars, other institutional factors may matter more than war. The diminution of fiscal capacity due to war appears less pronounced after the end of the cold war.     

Mediation,Peacekeeping And Civil War Peace Agreements

The post-civil war agreement phase is vulnerable to credible commitment problems, a lack of government capacity to implement, and/or mutual vulnerability to retribution from violating the agreement. This study’s main contribution is to demonstrate the combined utility of mediation and UN peacekeeping. Mediation builds trust and confidence and works with the parties to design an efficacious agreement conducive to, among other features, tamping down post-agreement violence. Peacekeeping stems violence and facilitates the implementation of the agreement. Agreements that are mediated and followed by UN peacekeeping are expected to be more robust in terms of staving off violence. We report the effects of the mediation–peacekeeping interaction using a method correcting for a common misinterpretation of interaction terms. We test logit and hazard models using a sample of full and partial civil war peace agreements signed between 1975 and 2011. Controlling for agreement design, democracy, and income per capita, the results indicate mediation and its interaction with peacekeeping reduce the probability of renewed/continuing violence and have a positive impact on agreement duration. We also report brief case study evidence from the 1990s peace process in Guatemala.