Rural windfall or new resource curse? Coca, income and civil conflict

Abstract—We study the consequences of an exogenous upsurge in coca prices and cultivation in Colombia, where most coca leaf is now harvested. This shift generated only modest economic gains in rural areas, primarily in the form of increased self-employment earnings and increased labor supply by teenage boys. The rural areas that saw accelerated coca production subsequently became considerably more violent, while urban areas were affected little. These findings are consistent with the view that the Colombian civil conflict is fueled by the financial opportunities that coca provides and that rent-seeking by combatants limits the economic gains from coca. If it weren’t for the armed groups, I think we could reach a consensus on what the region needs to progress. But all the armed groups want is to control the economic question, and all are willing to massacre or murder or force people from their homes to win. —Gloria Cuartas, mayor of Apartado ́ (quoted in Kirk, 2003) I