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This paper shows how ethnic identities may become more salient due to natural resources extraction. We combine individual data on the strength of ethnic—relative to national—identities with geo-localised information on the contours of ethnic homelands, and on the timing and location of mineral resources exploitation in 25 African countries, from 2005 to 2015. Our strategy takes advantage of several dimensions of exposure to resources exploitation: time, spatial proximity and ethnic proximity. We find that the strength of an ethnic group identity increases when mineral resource exploitation in that group's historical homeland intensifies. We argue that this result is at least partly rooted in feelings of relative deprivation associated with the exploitation of the resources. We show that such exploitation has limited positive economic spillovers, especially for members of the indigenous ethnic group; and that the link between mineral resources and the salience of ethnic identities is reinforced among members of powerless ethnic groups and groups with strong baseline identity feelings or living in poorer areas, or areas with a history of conflict. Put together, these findings suggest a new dimension of the natural resource curse: the fragmentation of identities, between ethnic groups and nations. [ABSTRACT FROM AUTHOR]

We investigate how variations in soil productivity affect civil conflicts. We first present a model with heterogeneous land in which variations in input prices (fertilizers) affect appropriable rents and the opportunity costs of fighting. The theory predicts that spikes in input prices increase the likelihood of conflicts through their effect on income and inequality, and that this effect is magnified when soil fertility is naturally more heterogeneous. We test these predictions using data on conflict events covering all Sub-Saharan African countries at a spatial resolution of 0.5 |$\times$| 0.5 degree latitude and longitude over the 1997–2013 period. We combine information on soil characteristics and worldwide variations in fertilizer prices to identify local exogenous changes in input costs. As predicted, variations in soil productivity triggered by variations in fertilizer prices are positively associated with conflicts, especially in cells where land endowments are more heterogeneous. In addition, we find that the distribution of land fertility both within and across ethnic groups affects violence, and that the effect of between-group heterogeneity in soil quality is magnified in densely populated areas. Overall, our findings imply that inequality in access to fertile areas—an issue largely neglected in the literature dealing with the roots of Sub-Saharan African civil wars—constitutes a serious threat to peace at the local level. [ABSTRACT FROM AUTHOR]

Using firm-level data, we find that a currency depreciation has two opposite effects on exports when firms are indebted in foreign currency: (i) a pro-competitive effect that increases both the amount of exports by firm (the intensive margin) and the number of firms (the extensive margin); and (ii) a balance-sheet effect that forces some firms to exit the export market and decreases the extensive margin. These results both provide an explanation for the negative reactions of trade after recent emerging market crises and document a finance-based empirical microfoundation to the 'exchange-rate disconnect puzzle'. [ABSTRACT FROM AUTHOR]

This paper analyzes empirically the role of financial market imperfections in the way countries’ exports react to a currency depreciation. Using quarterly data for 27 developed and developing countries over the period 1990–2005, we find that the impact of a depreciation on exports will be less positive—or even negative—for a country if: (i) firms borrow in foreign currency; (ii) they are credit constrained; (iii) they are specialized in industries that require more external capital; (iv) the magnitude of depreciation or devaluation is large. This last result emphasizes the existence of a nonlinear relationship between an exchange rate depreciation and the reaction of a country's exports when financial imperfections are observed. This offers a new explanation for the consequences of recent currency crises in middle-income countries. [ABSTRACT FROM AUTHOR]