We examine two factors that help explain the prevalence of conflict in low-income countries: that adversaries cannot enforce long-term contracts in arms, and that open conflict alters the future strategic positions of the adversaries differently than does peace. Using an infinite horizon model,...

We examine how socio-political conflict in Bolivia has affected its economic performance since the 1970s. Such conflict includes strikes, demonstrations, road blockades, and conventional rent-seeking. Since conflict has costs, it diverts resources away from production, tends to reduce investment...