abstract | We provide evidence about the mechanisms linking resource-related income shocks to conflict, focusing specifically on illegal crops. We hypothesize that the degree of group competition over resources and the enforcement of illegality explains whether opportunity cost or contest effects dominate. Combining temporal variation in international drug prices with spatial variation in the suitability to produce opium, we show that in Afghanistan higher prices increase household living standards, and reduce conflict. Using georeferenced data on the drug production network and Taliban versus pro-government control highlights the importance of opportunity cost effects, and reveals heterogeneous effects in line with our theory.
bio | Sarah Langlotz is an Assistant Professor (Akademische Rätin) at the Chair of Development Economics of Prof. Dr. Andreas Fuchs. She defended her PhD thesis on "Conflict, Income Shocks, and Foreign Policy: Macro- and Micro-Level Evidence" in 2018. Her thesis was supervised by Prof. Dr. Axel Dreher and Prof. Philip Verwimp and was awarded the 1st Price for Excellence in Applied Development Research by the German Economic Association and KfW Development Bank. After defending her PhD thesis she worked as a postdoctoral researcher at the Chair of International and Development Politics in Heidelberg hold by Prof. Dr. Axel Dreher and at the Heidelberg Institute for Global Health.