Does Democracy Moderate Resource-induced Conflicts ?
Can institutionalized transfers of resource rents be a source of civil conflict? Are cohesive institutions better in managing distributive conflicts? We study these questions by exploiting exogenous variation in the oil revenues disbursements to subnational governments together with new data on local democratic institutions in Nigeria. We make three contributions. First, we document the existence of a strong relationship between rents and conflict far away from the physical location of the resource. Second, show that distributive conflict is highly organized involving political militias and concentrated in the extent to which local governments are non-cohesive excluding ethnic groups from political power. Third, we show that democratic practice in form of locally elected councils significantly reduces the link between rents and civil conflict. We document that elections (vis-a-vis appointments) produce institutions that are perceived as more cohesive along ethnic lines and vastly limit the extent to which distributional conflict between groups breaks out following exogenous shocks to the available rents. Throughout, we confirm these findings using individual level survey data.