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This article builds on the intellectual legacy of Jan Tinbergen by extending his analysis on welfare and security into a framework involving strategic interaction. I first incorporate welfare and security in terms of interstate tensions into a single utility or payoff function. An uncertain world is characterized by states that are more peaceful, and others where nations are more hostile to each other. Both conflictual and peaceful outcomes lie along a spectrum of hostility short of war. The strategies adopted by the two countries, which promote peace, can be complements or substitutes. This means that they can go up or down in response to increases in the strategies of its rival. I demonstrate that noncooperative behaviour between nations is Pareto inferior to cooperative behaviour, because the latter is associated with more actions and efforts to promote peace. Cooperative behaviour is akin to Tinbergen's notion of world government. Non-cooperative behaviour by states also leads to moral hazard, and there can be free-riding in joint peaceful behaviour by some nations, particularly when the strategies of the countries are substitutes. The model is extended to aggressive international behaviour, including that mandated by populist plebiscites or election victories, as well as an outline of individual behaviour driven by identity-based politics.

This paper formally models the rise in populist politics during the last decade. In the literature the rise in populism is attributable both to cultural and economic factors. Chief among the latter is the inequality engendered by globalization and technical progress. When the plight of the marginalised is ignored by mainstream centrist parties, populist challengers rush in emphasizing cultural factors, invoking an enviable bygone past reminiscent of the golden age of capitalism. In what follows we apply prospect theory, where disenchanted individuals support populists because they promise to enact what is desirable, even at the expense of ha

Existential threats, such as the COVID-19 pandemic, have historically engendered intellectual paradigm shifts, and even systemic transformations in the economy and polity. This paper focuses on two inter-related phenomena: rising economic inequality and the diminution of liberal democracy, a feature common to both developed and developing countries set in the context of a ubiquitous and globalized capitalism. In the post-pandemic world, we need to harness the positive dimensions of the powerful capitalist system to lower i

The term liberal peace is employed to explain the absence of fatal conflict between democratic nations that are also economically interdependent. The expression, liberal peace, therefore, has an economic dimension, as well as an element based on a common polity and sets of values. I sketch the ideal and economic versions of the liberal peace theory. Policies promoting globalization may engender a backlash social conflict risks, as they produce inequality. In developed countries we witness the rise of populism, and the rolling back of the liberal aspects of democracy in developing countries. The avoidance of these problems require careful management of policies such that growth is broad-based, and policies promoting greater openness are sufficiently cushioned to protect losers. It is also necessary to manage globalization, and limit its negative impact on domestic social contracts, particularly when it comes to inequality, labour rights and fiscal austerity.

Even an idealist philosopher like Immanuel Kant (1795) considered war to be the natural state of man. In that respect, he shared the perspective of the English philosopher Thomas Hobbes (1651). According to Hobbes, the state of nature was characterised by anarchy akin to perpetual war ; each man taking what he could with no basis for right or wrong. Life was: "solitary, poor, nasty, brutish and short". Consequently, it was in the interest of individuals to surrender their individual freedom of action to an absolute ruler in return for personal security and rule based interactions in society. Kant was concerned more with preventing war between nations. That would require the simultaneous adoption of a republican constitution by all nations, which inter alia would check the war-like tendencies of both monarchs and the citizenry; the cosmopolitanism that would emerge among the comity of nations would preclude war, implying a confederation amongst such nation states (foedus pacificum). Kant's notion of cosmopolitanism is also applicable within nation states. Both thinkers were concerned with mechanisms that would engender peace. In other words, peace has to be achieved through deliberate design; this is what Galtung (1964) described as the negative peace (the absence of war).

ABSTRACT This paper focuses on two areas of security concern for the European Union: terrorism and international crime. I present a model of game-theoretic interaction between a European state and a domestic dissident group, who, on occasion, may resort to acts of terrorism. Here, identity is crucial to the putative terrorist, providing the microfoundations of dissident group behaviour by solving the collective action problem. I also sketch a macromodel of drugs production in a conflict-ridden developing country, where I argue that demand-side policies of regulation may be better than policies that are aimed at eradicating supply. As far as the policy implications are concerned, first excessive deterrence against potential terrorists may backfire. Secondly, space needs to be created so that Muslim migrants are able to merge their personal identities within their adopted European homelands. Thirdly, the economic discrimination against Muslims in Europe needs to be redressed. Finally, aid to fragile drug producing states should be broad-based and poverty reducing, not just benefiting warlords.

The term liberal peace is employed to explain the absence of fatal conflict between democratic nations that are also economically interdependent. The expression, therefore, has an economic dimension, as well as an element based on a common polity and sets of values. I sketch the ideal and realist versions of the liberal peace theory as they may be applied to the contemporary developing world. I address how globalization may affect the incidence of internal conflict in developing countries. Policies promoting globalization may be conflict enhancing, even if highly open economies are found to be less conflict prone. This may be because the road to prosperity may first increase the incidence of violence before a steady-state associated with a high income level and peace is achieved. This requires careful management of policies such that growth is broad-based and policies promoting greater openness are sufficiently cushioned to protect losers. Moreover, the process of democratisation may raise the risk of conflict unless suitable checks and balances on executive power are in place.

ABSTRACT: I review the relationship between natural resource endowment type and economic growth in developing countries. Certain types of natural resources such as oil and minerals tend to exhibit concentrated production and revenue patterns, while revenue flows from other resources such as agriculture are more diffused. Most developing countries that export products from the first group are prone to growth failure in recent times. The most important channels are political economy mechanisms, where there are negative relationships between natural resource rents and institutional development. An explicit model of growth collapse with micro-foundations in rent-seeking contests that have increasing returns in rent seeking outlays is presented.

Summary: This paper focuses on the main factors that contribute to the dangers of violent internal conflict erupting, or re-igniting after a peace has been concluded. The conflict literature has identified greed and grievance as the principle causes of conflict. But for either of them to take the form of large-scale violence there must be other factors at work, specifically a weakening of the ʻsocial contract'. Such a viable social contract can be sufficient to restrain opportunistic behaviour such as theft of resource rents and violent expression of grievance. The social contract, therefore, refers to the mechanisms and institutions of peaceful conflict resolution. Three main risk factors are considered in this briefing: The breakdown of redistributive mechanisms, democratic transitions and lack of economic progress.

__Abstract__ We examine the role of war in retarding state fiscal capacity in developing countries, measured by tax revenue ratios to GDP. This in contrast to the European experience from the Renaissance to the 20th century, where it is believed that war and state-building were inseparable, enhancing the fiscal capacity of the state; in turn enlarging the scope and magnitude of government expenditure. We build a simple theoretical model of a factionalized state, where patronage substitutes for common interest public goods, along with the possibility of violent contestation over a rent or prize, typically in the form of natural resource revenues. Our dynamic panel empirical analysis on the determinants of fiscal capacity is applied to 79 developing countries, during 1980-2010. Results indicate that war, especially in its current dominant form of civil war, retards fiscal capacity, along with imperfect democracy, political repression, the quality of governance, dependence on oil and macroeconomic mismanagement. High intensity conflict is particularly destructive of state capacity. Countries experiencing low intensity wars, other institutional factors may matter more for fiscal capacity formation compared to war. The diminution of state capacity due to war appears less pronounced after the end of the cold war.

This paper investigates the relationship between ethnic and religious diversity and financial development by using the data for 102 developing countries. It is widely accepted that financial depth, and the more ready availability of finance, has a central role to play in fostering economic growth. We hypothesize that financial development in developing countries, especially those at the early stages of economic development, may be retarded by pre-existing ethnic and religious diversity, which may produce conflict. However, we believe that this risk can be moderated by sound institutional functioning – including good governance and democracy. Financial depth is measured by M2 and private credit (as a percentage of GDP); the Alesina fragmentation index is used for measuring ethnic and religious diversity, varieties of democracy (VDEM) and the quality of governance datasets. Our results are supportive of our hypothesis that ethnic and religious diversity can indeed hamper financial development; these risks, however, are mitigated by well-functioning institutional arrangements

This study re-examines the oil and democracy nexus, which is central to the political resource curse by applying the latest democracy dataset, V-DEM, into the analysis in a sample of 100 Developing Countries, over the period 1935-2014. Our study is a contribution to this taxonomic literature where we improve on previous studies not only by employing a novel democratic data source, but also because we use two definitions of oil wealth which renders our results more robust, besides delineating the sample into small and large oil endowments and looking into the experience of two regions, Latin America and the Middle East. Our analysis highlights nuances in the oil- democracy relationship. First, that there is prima facie evidence for a political resource curse if we do not control for pre-existing institutions that promote democracy. Second, once we decompose the sample into small and large oil endowments, the political resource curse vanishes, and also for Latin America, whilst for oil dependent economies in the Middle East and North Africa it still remains. Third, after controlling for pre-existing institu-tional quality, measured in our

This study re-examines the validity of oil-hinders-democracy hypothesis by comparing the long-term effects of oil abundance and oil dependence democracies individually. Based on five novel measures of democracy from V-DEM dataset, we test this hypothesis on data from 95 developing countries over the period 1932–2014. Our analyses show some nuances in the oil-democracy relationship. First, that oil wealth adversely affects democracy across the full sample. Second, once we ‎classified developing countries into five sub-samples, we consistently ‎find that the influence of oil wealth (abundance/dependence) measures on democracy varies across geographical regions‎ as well as small and large-scale oil endowment countries. Third, we find that institutional quality in the form of rule of law plays a crucial role in altering the oil–democracy link. Overall, we provide ample support for 'Conditionalist view'. In other words, oil has different effects on democracy in the context of oil abundancy, geographic regions, and institutional aspects. More importantly, it seems that oil abundance does not hinder democracy in each of the five sub-samples and in some instances can even be a blessing. Thus, it is worthy to make a distinction between these two types of oil wealth to better understand the oil-democracy relationship.

Abstract We examine whether greater inter-state trade, democracy and reduced military spending lower belligerence between India and Pakistan, beginning with a theoretical model covering the opportunity costs of conflict in terms of trade losses and security spending, as well as the costs of making concessions to rivals. Conflict between the two nations is best understood in a multivariate framework where variables such as economic performance, integration with rest of the world, bilateral trade, military expenditure, democracy orientation and population are simultaneously considered. Our empirical investigation based on time series econometrics from 1950 to 2005 suggests that reduced bilateral trade, greater military expenditure, less development expenditure, lower levels of democracy, lower growth rates and less general trade openness are all conflict enhancing. Globalization, or a greater openness to international trade with the rest of the world, is the most significant driver of a liberal peace, rather than a common democratic orientation.

This paper expands the micro-foundations of the traditional greed and grievance non-cooperative model of civil conflict. First, we allow for greed and grievance to be orthogonal, so that they may affect each other rather than being exogenous. Second, we allow for the reaction curves of both parties in non-cooperative games to be substitutes and not inevitably complementary, so a peaceful strategy from a group may be followed by a belligerent upsurge from the other. Third, we also allow for Diaspora transfers to rebel groups, thus generating a trade-off between the gains associated with peace and war among rebels. Fourth, we expand external aid in the form of fungible financing of government transfers 'buying' peace by allowing for mechanisms that induce behavioural change towards peace. These extensions provide a better understanding of conflict persistence, the consequences of competing international aid and sub-optimal sanctions provision ("cheap talk") by the international community.