Working Paper 200 January 2010 From Predation to Production

This paper builds an analytical framework that models predation (banditry) and production as part of the choice of a rational utility-maximising agent. Aggregating this choice up for society produces equilibrium outcomes ranging from Utopia (where no one predates) to Amorphy (where everyone does). The intermediate position constitutes Anarchy where a mix of predation and production prevail. This framework shows that (i) organized conflict can lower welfare relative to the level that prevails without such organization; and, (ii) peacekeeping raises welfare, but the equilibrium is self-enforcing only with the requisite level of peacekeeping technology. The last is then used to analyse conditions under which peacekeeping arises endogenously and the potential (and catalytic) role for external assistance in the above. www.cgdev.org Satish Chand From Predation to Production Post-conflict Satish Chand Center for Global Development Helpful comments on an earlier draft of this paper from Michael Clemens, Desha Girod, and Davesh Kapur are gratefully acknowledged. This paper was made possible by financial support from the Australian Agency for International Development. Satish Chand. 2010. “From Predation to Production Post-conflict.” CGD Working Paper 200. Washington, D.C.: Center for Global Development. http://www.cgdev.org/content/ publications/detail/1423695 Center for Global Development 1800 Massachusetts Ave., NW Washington, DC 20036 202.416.4000 (f ) 202.416.4050 www.cgdev.org The Center for Global Development is an independent, nonprofit policy research organization dedicated to reducing global poverty and inequality and to making globalization work for the poor. Use and dissemination of this Working Paper is encouraged; however, reproduced copies may not be used for commercial purposes. Further usage is permitted under the terms of the Creative Commons License. The views expressed in this paper are those of the author and should not be attributed to the board of directors or funders of the Center for Global Development. Foreword I am pleased to sponsor this working paper by Satish Chand, a visiting fellow at CGD and research professor at the University of New South Wales. The paper is part of CGD’s ongoing work on weak and fragile states, which is focused on improving the effectiveness of foreign aid in post-conflict interventions. Chand’s research question is highly relevant as international actors continue to struggle with appropriate and effective intervention strategies. The theoretical model in the paper makes a valuable contribution and sets the stage for answering important empirical questions. Chand examines the challenge of shifting government behavior from predation to production via externally sponsored peacekeeping interventions in fragile or post-conflict states. Chand shows that the tendency to either predate or produce is a choice of rational utility-maximising agents, and that external intervention can shift the equilibrium from one dominated by predation (characteristic of a post-conflict scenario) to one motivated by production. The challenge for international peacekeepers is therefore in the creation of conditions that reduce predation to the point where excess output from production raises incomes above their predatory levels. Vijaya Ramachandran Senior Fellow Center for Global Development