Concession Stands: How Mining Investments Incite Protest in Africa

Abstract

Foreign investment in Africa’s mineral resources has increased dramatically. This paper addresses three questions raised by this trend: do commercial mining investments increase the likelihood of social or armed conflict? If so, when are these disputes most prevalent? And, finally, what mechanisms help explain these conflicts? I show, first, that mining has contrasting effects on social and armed conflict: while the probability of protests or riots increases (roughly doubling) after mining starts, there is no increase in rebel activity. Second, I show that the probability of social conflict rises with plausibly exogenous increases in world commodity prices. Finally, I compile additional geo-spatial and survey data to explore potential mechanisms, including reporting bias, environmental harm, in-migration, inequality, and governance. Finding little evidence consistent with these accounts, I develop an explanation related to incomplete information—a common cause of conflict in industrial and international relations. This mechanism rationalizes why mining induces protest, why these conflicts are exacerbated by rising prices, and why transparency dampens the relationship between prices and protest.

Unpacking the Local Resource Curse: How Externalities and Governance Shape Social Conflict

“…Extractive industries—including mining, oil, and gas—are an increasingly important part of developing economies worldwide, providing employment, tax revenue, and access to infrastructure (Loayza, Mier y Teran, and Rigolini 2013; Cust and Rusli 2014; Cust and Poelhekke 2015). Despite contributing vital economic activity for impoverished peripheral regions, extractives have become associated with growing levels of violent social conflict that undermines the livelihoods of local communities, threatens long-term economic growth, and contributes to political instability (Haslam and Tanimoune 2016; Berman et al 2017; Christensen 2019). One well-studied hypothesis argues that this is due to a “local resource curse”—a dynamic where highly concentrated costs generate grievances that are not offset by broader societal benefits of economic expansion (e.g., Paler 2011; Aragón, Chuhan-Pole, and Land 2015; Arce 2016).…”

Multinational Corporations and Political Violence: Trends and Forecasts

“…With firm and group level data, one promising approach is to model interactions using sequence analysis methods (Casper and Wilson, 2015;D'Orazio and Yonamine, 2015). Substantive research has been conducted at this level, for example petroleum companies operating in Nigeria (Akporiaye, 2014) and mining operations in Africa (Christensen, 2019). We are therefore optimistic that future research at disaggregate levels can help to explain attacks against MNCs and the role of MNC behaviors.…”

Nowhere to Go: FDI, Terror, and Market-specific Assets

“…In the face of these mixed results, the literature has disaggregated political violence according to its magnitude (Barry 2018; Christensen 2019; Braithwaite, Kucik, and Maves 2014; Enders, Sachsida, and Sandler 2006; Li 2006) and target selection (Bandyopadhyay, Sandler, and Younas 2014, 2018; Enders, Sachsida, and Sandler 2006; Powers and Choi 2012). Transnational attacks—involving perpetrators, targets, or victims from multiple countries—have been used to measure the most direct risks to MNCs (Bandyopadhyay, Sandler, and Younas 2014).…”