Essays on conflict and arms trade

This thesis consists of three chapters. The first chapter is a survey of the economic literature on conflict studies and related to the next chapters of the thesis. I discuss the literature concerned with these two questions “Why do economists should involve in studying the determinants of war? Are there economic factors that cause the war?” I also study the different theories that explain the shifts to the distribution of power in the international system and the influence of these power shifts on conflict. Natural resources have been the focus of economic literature on conflict studies, hence, I devote a section to economic resources, energy, and conflict. The final topic of this chapter is on the arms trade, its determinants and its relationship with conflict which closely is relevant to study the third chapter of the thesis. In the second chapter, “Uncertainty of Oil Prices and Interstate Conflict”, which is co-authored by Professor Paola Valbonesi and Professor Massimiliano Caporin. We empirically study the relationship between oil price uncertainty and inter-state conflict incidence by using different Vector AutoRegressive (VAR) models, also augmented with Heterogeneous (VHAR) components. We build two measures for oil price uncertainty and investigate the Middle East and North Africa (MENA) interstate conflict data. Our results show that uncertainty in the oil market increases the incidence of conflict in the region. By further decomposing the model for OPEC and non-OPEC members of the region, we found that while the OPEC members immunise themselves against conflict, oil price uncertainty affects the conflict in non-OPEC members positively. The last chapter, which is my job market paper, presents theoretical and empirical models to investigate the effect of citizen’s internet access on the governments’ decision on arms import. The citizens have the opportunity to oppose the government’s decision and the government seeks to receive foreign rent through buying arms from an external arm producer ally (policy orientation toward importing arms). The strength of the government policy (i.e. buy arms from a foreign ally) is its own private information. 6 The media outlets, by sending informative signals to citizens on how strong the government policy is, facilitate the decision to participate in collective action against the government. The aggregate participation of citizens with respect to the strength of policy determines whether the policy is changed or not. Theoretical predictions are tested by empirical analysis. My empirical findings show that internet access magnifies the effect of political participation rate on arms imports. These empirical results are gained by developing a cross-sectional data analysis of 70 countries from 1993 to 2017. A negative and significant coefficient for the interaction of internet access and political participation shows that higher internet access and higher political participation leads to lower imports of arms.