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Of Rulers, Rebels and Revenue

This paper investigates the relationship between civil war onset and state capacity, including the role that primary commodities play in that relationship. It accomplishes this task by moving the theoretical focus of the civil war literature away from an almost exclusive concern with rebels, to a consideration of both rebels and rulers as rational predators attempting to maximize their revenue. In order to deal with the endogeneity posed by including fiscal measures of state capacity in single equation models of civil war onset, the paper employs a simultaneous equations framework. This framework allows us to capture the effects of civil war onset on state capacity and vice versa, as well as the effects of primary commodities on both endogenous covariates. The main findings from this analysis include: state capacity does not affect civil war onset, but civil war onset reduces state capacity; state capacity reduces civil war incidence, just as civil war incidence reduces state capacity; and that primary products only directly affect state capacity, but they do not directly affect civil war onset or incidence as found in previous contributions to the literature.