Presentation ifad ifpri workshop 1-18-12

Decreasing Vulnerability to Conflict in Arab Countries through Rural DevelopmentClemens Breisinger, Jean-Francois Maystadt, Olivier Ecker, Perrihan Al-Riffai Development Strategy and Governance Division International Food Policy Research Institute IFPRI-IFAD Workshop International Fund for Agricultural Development, Rome; January 19, 2012

Arab world is the most conflict-affected region in the world“How is it that countries in the Middle East and North Africa could face explosions of popular grievances despite, in some cases, sustained high growth and improvement in social indicators?”

At least six key questions emerge…• Getting the baseline right – Did the social indicators in the Arab world really improve? – Did economic factors play a role in the Arab Awakening at all? – Which policies and investments can improve those social indicators, for example food security?• Linking conflict, rural development and food security – Is the Arab world “special” when it come to development and conflict (Arab Exceptionalism)? – Are there specific links between conflict, rural development and food security in the Arab world? – How can rural and agricultural interventions be leveraged for improving the resilience of the rural poor to conflicts?

IFPRI runs two IFAD-supported projects to find answers to these questions Decreasing vulnerability to conflict through rural development • Descriptive: Conflict typology & narratives • Quantitative: – Cross-country – Country-specific, using ACLED and other geo- referenced data – Project-level analysis • Fieldwork, Interviews and Consultations

Workshop Agenda9:00-9:15 Welcoming remarks9:15-10:00 Beyond the Arab Awakening: Policies and investments for poverty reduction and food security (Clemens Breisinger and Perrihan Al-Riffai)10:00-10:30 Is there an Arab exceptionalism when it comes to conflict? Preliminary findings from cross-country analysis (Jean-Francois Maystadt)10:30-11:00 Coffee break11:00-11:30 Atlas for rural development and conflict: An interactive GIS-based tool for mapping and analysis (Olivier Ecker)11:30-12:00 Climate change and civil war in Somalia: Does drought fuel conflict through livestock price shocks? (Olivier Ecker)12:00-12:30 Discussion and ways forward

Social indicators may not have improved to the extend official data suggest The Arab growth-nutrition puzzleSource: Breisinger et al. 2011. http://www.ifpri.org/publication/economics-arab-awakening

What is the extend of food insecurity?

Risk of food insecurity (at the macro level) Source: Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.

Risk of food insecurity (at the micro level) Source: Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.

Risk of food insecurity in Arab world (plus Iran and Turkey) Source: Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.

Economics did play a role in the Arab AwakeningPercentage of people dissatisfiedwith their standard of living Yemen Iraq Lebanon Mauritania Morocco Syria Sudan Libya Bahrain Algeria Jordan Djibouti Saudi Arabia Egypt Tunisia UAE Kuwait Qatar GDP per capita (PPP, current international $) Source: Based on Gallup World Poll (2011) and WEO (2011) data. Note: Bubble size: Number of dissatisfied people. Color scale: Change in level of dissatisfaction (time period between first and last surveys undertaken in the country; last survey: 2010, first survey: 2005-2009): green: decrease; orange and red: increase, with red: increase at an annual growth rate of at least 2 percentage points.

Which policies and investments canimprove social indicators, food security?

Growth has to become more pro-poor in Arab countries, also in agricultureDep. var.: Sector VA Agricultural and non- Sector value added Total GDP growthprevalence change share (% agricultural growth growthin child stunting of GDP) 1 2 3 4 5 6Growth (per capita) GDP 100.0 -0.11 *** -0.11 *** AgVA 19.4 -0.40 *** -0.47 *** -0.28 ** -0.34 *** Non-AgVA 80.6 -0.07 *** -0.07 ** MaVA 19.9 -0.43 *** -0.52 *** InVA 14.3 0.05 0.10 SeVA 46.4 -0.02 0.00 GDP * Arab-TI 100.0 0.04 AgVA * Arab-TI 15.3 1.05 ** 1.32 ** Non-AgVA * Arab-TI 84.7 0.00 MaVA * Arab-TI 13.3 0.00 InVA * Arab-TI 25.0 -0.08 SeVA Arab-TI 46.4 -0.28Initial stunting level -0.29 *** -0.29 *** -0.31 *** -0.30 *** -0.30 *** -0.30Observations 406 406 402 402 402 402F-value 1.1 1.1 1.2 1.2 1.3 1.4R-squared 0.32 0.32 0.33 0.35 0.36 0.04R-squared adjusted 0.04 0.04 0.06 0.07 0.08 0.11 Source: Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.***, **, * statistically significant at the 1%, 5%, and 10% level, respectively.

One reason why agriculture is not as pro-poor in Arab countries is because it’s no longer the major source of income for the poor

Public spending in Arab countries ishigh compared to other world regions Source: based on Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.

But, there is scope for improving the efficiency of public spending, especially in social sectors Source: Breisinger et al. 2012. “Beyond the Arab Awakening.” IFPRI Food Policy Report 25.***, **, * statistically significant at the 1%, 5%, and 10% level, respectively.

Three focus areas for a food secure Arab world without poverty• Improve data and capacity for evidence-based decision making• Foster growth that enhances food security – At macro level – At household level• Revisit the efficiency and allocation of public spendingArab countries are heterogeneous and strategieshave to be country specific

Conflict, food security, poverty and rural development: What are the linkages?

Is There an Arab Exceptionalism When It Comes to Conflict?Preliminary Findings from Cross-Country AnalysisJean-Francois Maystadt, Clemens Breisinger, Jean-Francois Trinh Tan Presented by Jean-Francois Maystadt

Outline1. Introduction2. Conceptual Framework3. Is there an Arab exceptionalism? Applying the Collier-Hoeffler framework4. Arab exceptionalism: A puzzle to be explained5. Preliminary conclusions, discussion and further work

1. Introduction: The costs of conflict• -2.2% GDP growth/year of conflict (Collier 2007)• 21 years to recover pre-war GDP level (Collier 2007)• ESCWA: -17.5% per capita GDP/year of conflict• ESCWA: Major backwards in MDGs• Micro : Health, education, assets, physical and political capital, particularly for the most vulnerable (children, women, marginalized, etc)

The Arab World at a crossroad• “Power vacuum” : Particularly at risk• But no determinism … also opportunities Major causes of conflicts and which preventive measures? How best to accompany such political transition?

2. Conceptual framework ‘Motivation’Grievances, Inequality, Polarization, etc. ‘Opportunity’Opportunity cost to participate to violence depends onalternative sources of income, the potential loss andrewards (therefore capacity for leaders to finance) ‘Polity’Poor governance and lack of political inclusionState capacity to repress or “pay for peace”

Collier and Hoeffler (2004, OEP)On a sample of 161 countries between 1960 and 2000 ‘Opportunity’ (‘greed’) matters, not ‘Motivation’ (‘grievance’)  Per capita income, GDP growth rate, male secondary education enrolment (-)  Population (+), Primary export commodities (+, non- monotonic)  Inequality, political rights, ethnic polarization and religious fractionalization are not significant (only ethnic dominance) The role of ‘Polity’ is not investigated and may be a source of bias

3. Arab Exceptionalism?Sorli et al. (2005, JCR) : 1960-2000• Log(GDP per capita), economic growth : <0• Ethnic dominance• No MENA specific effect : “Conflict is quite well explained by a general model of civil war” (p.160)Shortcomings:• Sample of 90 countries (excl. e.g. Libya, Somalia, Yemen)• No Fixed Effect (Djankov and Reynal-Querol, forthcoming REStat)• Predictive power 30% lower compared to SSA

Applying the Collier-Hoeffler framework (1) (2) (3) (4) Major Major Major Major Conflict Conflict Conflict Conflict Log of GDP per capita -0.310*** -0.377*** -0.391*** -0.322*** [0.101] [0.101] [0.118] [0.0962] Log of GDP per capita*MENA 0.087 -0.490* [0.288] [0.286] MENA 0.826*** -10.35** 2.156 [0.285] [4.998] [2.735] GDP growth -4.314*** -4.591*** -5.652*** -6.326*** [1.412] [1.422] [1.522] [1.466] GDP growth*MENA 6.181** 10.28*** [2.941] [2.992] Cold War 2.807*** 2.843*** 2.695*** 2.825*** [0.386] [0.393] [0.392] [0.393] Ethnic dominance 0.475* 0.397 0.440* 0.495** [0.254] [0.256] [0.265] [0.203] Log of population 0.443*** 0.466*** 0.412*** 0.496*** [0.0804] [0.0840] [0.0987] [0.0831] Log of population*MENA 0.607*** 0.109 [0.228] [0.166] Observations 3,452 3,452 3,452 4,600 Note: Including Collier-Hoeffler non-significant variables , i.e. Primary Commodity Exports , Primary Commodity Exports (squared), Ethnic Fragmentation, Geographical Dispersion

4. Arab exceptionalism: a puzzle Something specific to explain in the Arab world Collier and Hoeffler framework is inadequate Possible explanations?  Omitted variables: institutions inherited from the past, historical grievances, etc (country fixed effects)  Where the growth is coming from? (‘Opportunity’)  Agricultural versus non-agricultural growth  Youth bulges  Better proxy for natural resource dependency (e.g. oil)  Where the growth is going to? (‘Motivation’)  Inequality  Micro and Macro Food Security Index (FSI)  Political dimension? (‘Polity’)

Main empirical model Economic growth is the only robust finding in Collier and Hoeffler (2004) Arab exceptionalism is confirmed! ‘Opportunity’  Sectoral growth does not matter  Youth bulges (share of urban male aged 15-24 over the urban (or male) population aged 15) : no region-specific effect  Oil, gas, ores and minerals exports to GDP or dependency (>40%) . Oil dependency increases conflict in a non- monotonic way but the effect is totally driven by the Arab world

Main empirical model ‘Motivation’  Gini coefficient is uncorrelated to conflicts but known to poorly capture time-varying sources of grievances  Macro and Micro Food Security Indexes significantly increase the risk of major conflicts in Arab world ‘Polity’  Economic and political discrimination against minorities increase conflicts but not specifically for Arab countries  Past transitions to full democracy and autocracy reduce the risk of conflicts (using policyIV data, Persson and Tabellini 2006 AER)

Beyond Collier-Hoeffler framework (1) (2) (3a) (3b) (4) (5) Major Major Major Major Major Major Conflict Conflict Conflict Conflict Conflict ConflictGDP growth (t-1) -0.120** -0.197*** -0.0722 -0.25 -0.048 -0.0413 [0.0516] [0.0660] [0.170] [0.119] [0.0809] [0.0839]GDP growth*MENA (t-1) 0.265*** 0.727 0.373*** 0.113 0.252 [0.079] [0.689] [0.129] [0.219] [0.161]Child stunting (t-1) 0.000428 0.0000146 [0.00143] [0.00141]Child stunting*MENA 0.0119* 0.0111* [0.007] [0.0068]Child mortality (t-1) 0.000134 [0.0002]Child Mortality*MENA 0.0008 [0.0005]P-value (0.128)Food security index (t-1) -0.0407 [0.0462]Food security index*MENA 0.412* [0.216]Time dummies YES YES YES YES YES YESCountry Fixed Effects YES YES YES YES YES YESObservations 4,896 4,896 536 2,616 1,456 2,958Number of ccode 140 140 130 130 139 131

Beyond Collier-Hoeffler framework (6) (7) (8) (9) Major Major Major Major Conflict Conflict Conflict Conflict GDP growth (t-1) -0.339** -0.335** -0.116* -0.117* [0.139] [0.143] [0.0623] [0.0621] GDP growth*MENA (t-1) 0.437*** 0.434** 0.180** 0.117 [0.158] [0.175] [0.0791] [0.0958] Oil rents (t-1) 0.00265 [0.00227] Oil rents*MENA (t-1) -0.00847* [0.00445] Oil rents squared (t-1) -3.81E-05 [3.33e-05] Oil rents squared*MENA 0.000114** [5.00e-05] Oil dependency (t-1) -0.00876 [0.0298] Oil dependency*MENA 0.0902* [0.0486] Pol. Transition to democracy (t-1) -0.00337*** [0.00103] Pol. Transition to democracy*MENA -0.0256*** [0.00849] Pol. Transition to autocracy (t-1) -0.0019 [0.00218] Pol. Transition to autocracy*MENA -0.0189*** [0.00637] Time dummies YES YES YES YES Country Fixed Effects YES YES YES YES Observations 2,087 2,087 4,452 4,461 Number of ccode 73 73 131 131

Further works Robust to non-linear model, Lagging effects? Robust to the implementation of a dynamic model ? Dealing with missing values (unbalanced panel) … Preliminary results from 2SLS-FE model point to the vulnerability of food net importers to changes in food international prices for food insecurity and in turn, to the risk of conflict

Preliminary conclusions on the main Arab-specific correlates of war Food insecurity matters for conflicts in the Arab world Transition to democracy is welcomed but the transition period is risky Oil dependency increases the risk of conflictLimits: Not a paper on the Arab Awakening : only valid for major conflict events Cross-country analysis misses the heterogeneity (e.g. the role of environmental factors in Somalia or Sudan)But what could these results mean for particularcountries, at a particularly challenging time in history(risky but potentially providing new opportunities)?

Improving food security Avoid fiscally unsustainable and not well targeted measures (e.g. subsidies) Smart mix of policies, investments and targeted programs in the areas of trade, agriculture, water, health and education Economic growth that generates export revenues and benefits the poor and investments in education are key Country-level analysis and strategies are needed, in the case of Yemen for example a 7-Point action plan has been developed

How to use oil revenues? Oil revenues create fiscal space and should in principle be wealth enhancing ‘Paying for peace’ has become unsustainable, given increased repression (e.g. social media) and redistribution costs (e.g. youth and food prices) But, many Arab countries show “Dutch disease” symptoms, including low economic diversification and governance issues Oil rents should be directed to pro-poor growth enhancing investments, such as infrastructure and education, and to targeted transfers to the most food insecure populations

Towards a comprehensive spatial database: Atlas for Rural Development and Conflict: AnInteractive GIS-Based Tool for Mapping and Analysis Jose Funes Presented by Olivier Ecker

Spatial Patterns of Rural Development and Conflict (Work in Progress)1. Regional overview: a. Population & urbanization b. Infrastructure & market access c. Economic activity d. Vegetation e. Conflicts2. Conflicts—National perspective: a. Sudan b. Somalia

Climate Change and Civil War in Somalia: DoesDrought Fuel Conflict through Livestock Price Shocks? Jean-Francois Maystadt, Olivier Ecker, Athur Mabiso Presented by Olivier Ecker

Overview1. Introduction2. Linkages between drought, livestock prices, and civil conflict in the context of Somalia3. Identification strategy and empirical model4. Empirical results5. Robustness checks and identifying assumptions6. Conclusions and policy implications

Climate Change and Civil War in Somalia Extreme weather events have become more frequent and more severe due to climate change (IPCC 2011). Historical data suggest strong linkages between warming and civil war in Africa (Burke et al. 2009; Hsiang et al. 2011). Economic factors drive civil conflict (Collier & Hoeffler 1998, 2004; Blattman & Miguel 2010). Economic channel (opportunity costs): Expected income from participating in conflict relative to conventional activities (Miguel et al. 2004; Bruckner & Ciccone 2010; Ciccone 2011) Do droughts fuel conflict through lowering the opportunity cost for engaging in conflict? Given that the livestock sector is the mainstay of the economy, are drought-induced shocks on livestock prices the main driver of conflict onsets?

Civil Conflict-Drought Relationship Both droughts and violent civil conflicts have drastically increased in Somalia in recent years. Evidence indicate that there is also a spatial overlap of (drought- induced) hunger and poverty and occurrence of violence. Drought (and famine) is a slow-onset and large-area disaster, affecting large shares of the rural population concurrently. Coping mechanisms are limited because of widespread poverty and impaired clan support and due to absent public safety nets, lacking credit and insurance markets, etc. Selling productive assets (particularly livestock) is often the only remaining alternative. And, engaging in conflict to make an own living at the expense of others may appear opportunistic for some people. Somalia’s stateless order facilitates self-seeking behavior.

Variation in Conflict Events and Droughts Over TimeConflicts No. of violent conflicts per month Temperature Drought Index (TDI) TDI100 0 80 -0.4 60 -0.8 40 -1.2 20 -1.6 0 -2 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Conflicts and Drought-Induced HungerViolent conflicts by province, 1997- Estimated food security conditions, 4/20112010Source: Based on ACLED data (2011). Source: FEWSNET/FSNAU (2012).

Livestock Prices-Drought Relationship In the case of Somalia, household incomes can be proxied by changes in livestock prices. The livestock sector is central to the (rural) economy:  About 40% of national GDP  Almost 90% of agricultural GDP  More than 50% of all export earners  Source of food and income for more than 60% of the population  In pastoral livelihoods, 50-80% of the poor’s income Livestock prices are largely supply driven and thus prone to weather shocks. During drought, price depression is amplified by market information asymmetry.

Empirical Model (Opportunity Cost Approach)

Data and Measurement

Effects of Droughts on Violent ConflictsReduced-form regression: No. of conflictsTemperature Drought Index (TDI) 0.969*** (0.289)F-value 2.03***R-squared 0.081Observations 2,340No. of regions 18→ More droughts lead to more violent conflicts.

Effects of Droughts on Livestock Prices and Their Effects on Violent ConflictsTwo-stage regressionFirst stage Cattle price Goat price Camel priceTemperature Drought Index (TDI) -0.124*** -0.073*** 0.006 (0.035) (0.024) (0.033)Second stage No. of conflictsCattle price -11.13*** (4.984)Goat price -15.69*** (7.460)Camel price 186.9 (996.1)F-value (of the first stage) 5.62*** 5.01*** 6.87***R-squared 0.345 0.258 0.284Underidentification test 13.72*** 9.80*** 0.04Weak identification test 12.81 9.04 0.03Root mean square error 5.725 5.554 59.75Observations 1,289 1,585 1,560No. of regions 17 18 18

Livestock Price-Drought andLivestock Price-Conflict (Semi-)Elasticities Temperature Drought No. of conflicts Index (TDI)Increase of TDI by one standard deviation Cattle price -3.7% 0.58 Goat price -6.3% 0.70Increase of TDI due to an additional drought month associated with a temperature rise of 0.63⁰C Cattle price -8.2% 1.28 Goat price -13.9% 1.55IPCC A1B scenario: 1.8-4.3⁰C increase by 2100 Increase in drought months by 3-7 Increase in violent conflicts by 4-7

Robustness of Estimation Results are entirely driven by changes in temperature, and the TDI is a good measure for identifying droughts. The model is robust to alternative specifications, controlling for potential effects of time lags and leads, time sensitivity, and seasonality. Neighborhood effects seem not to matter for conflict onsets (given the available data) Normalization of livestock prices does not compromise our results.

Validity of Identifying Assumptions Test statistics (F-test, weak instrumental var. test) suggest that the TDI is a strong instrument of livestock prices. Yet the possibility that droughts affect conflicts through channels of transmission other than livestock prices (e.g., non-livestock income) cannot be ruled out completely. However, tests of the validity of the exclusion restrictions do not reveal effects transmitted through other channels. Possible violation: Effects of food aid on conflict → Biases into both directions are conceivable. But previous studies (Dorosh et al. 1995, Kirwan & McMillan 2007, Mabuza et al. 2009) suggest weak links

Conclusions and Policy Implications Droughts fuel civil conflicts through livestock price shocks in Somalia. Climate change adaptation strategies contribute to conflict prevention. Building resilience through establishing effective coping mechanisms and generating and diversifying income earning opportunities is critical for both conflict prevention and climate change adaptation. In the shorter run, income support, weather insurance schemes, market interventions, and investments along the livestock value chain can help to mitigate the impacts of droughts. More research is particularly needed to analyze practical policy options and programs in terms of their effectiveness to strengthen resilience in (semi-)pastoralist livelihoods.

Discussion and Ways Forward Moderated by Clemens Breisinger

Next steps• Cross country analysis report• Expansion of case study countries to 5 – Sudan: natural resources and conflict – Lebanon: rural development and IDPs – Yemen: conflict impact and options for transition – Egypt: preventing conflict through subsidies? – Syria:… – Other:…• ARC Atlas development – inclusion of IFAD data?• Field trips with interviews

Natural resources & conflict in South Kordofan and Sudan1. How do changes in environmental conditions affect conflict?  Are pastoralist areas more vulnerable to clashes over the use of pasterland among settled communities and agro- pastoralist groups?  How may the development objectives of mechanized farming and local investment lead to tensions with pastoralist communities and rain-fed small farmers?2. How do massive human and animal displacements affect environmental degradation and in turn, the risk of conflict?

Food policies for conflict prevention: The case of food subsidies in Egypt Motivation: Food policies may reduce the risk of conflict but with a very high opportunity cost and with possible negative effects in terms of obesity and micronutrient malnutrition Research Questions:(1) What is the impact of food policies on the risk of conflict (violence)?(2) Which policies are suitable to reduce conflict, create inclusive growth, and improve people’s nutrition and overall well-being?

Impacts of Conflict-induced Displacement on Inequality among Refugees and the Hosting Population and Policy Options for Inclusive Development Possible study country: Lebanon; refugees: Palestinians, Iraqis (Syrians) Exclusion is critical in terms of economic (e.g., markets, employment, land), social (e.g., health, education, basic infrastructure), and political aspects. Grievances occur among the refugee population, between refugees and the hosting population, and among the hosting population living near the camps (partly because of increased competition over resources). So, what are the impacts of displacement among and within the populations? In particular, what are the effects on economic and social inequality (i.e. potential source of new conflicts)? What are effective policy options for refugee integration and mutually beneficial development?

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Presentation ifad ifpri workshop 1-18-12

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