NBER Publications by Ethan B. Kapstein

This paper explores the relationship between economic activity and political violence through the lenses provided by several different mechanisms. Investment as a predictor of future violence implies that low private sector investment today provides a robust indicator of high violence tomorrow. “Rent-capture” or predation asserts that economic programs and business investment will increase violence by increasing extortion by insurgents. “Hearts and minds” counterinsurgency has been asserted to link economic activity to political violence in three ways, through an opportunity cost mechanism by which improved economic conditions reduce the cost of rebel recruitment; through a “hope and gratitude” effect by which development assistance generates support for government, reducing cooperation wi...