Economic shocks, civil war and ethnicity

Publication Title

Journal of Development Economics

Document Type


Department or Program


Publication Date



Civil war, Commodity terms of trade, D74, Ethnic diversity, Ethnicity, O11, O17, Social conflict


Using a novel cross-country panel dataset, we show that commodity terms of trade declines cause civil war in countries with intermediate ethnic diversity. The civil war effects for highly diverse or homogenous societies are negative and insignificant. Since the size of the largest ethnic group explains 96% of the variation in the ethnic diversity measure, we conjecture that a key problem may be ethnic dominance: countries where the ethnic plurality is large, but not so large it cannot be challenged, may be most vulnerable to economic shocks. The findings may help to bridge the partly distinct literatures linking ethnicity and economic factors to conflict.

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