Conflict or Compromise? Theory and Evidence from Africa and Asia

Abstract Civil wars are a recurring phenomenon undermining development in weak states. Faced with the possibility of costly conflict, why don’t leaders share power? I investigate the role of an unexplored commitment problem, both theoretically and empirically. The model features a leader who can appease challengers by sharing power, but doing so increases their effectiveness at launching a rebellion. I show that commitment worsens as the opposition becomes stronger, and derive testable non-monotonic implications of group strength on power-sharing and conflict. As challengers become stronger, the likelihood of inclusion (positive transfers) increases up to a threshold, beyond which the leader prefers to exclude an opposing group and face conflict. I test the model using data on politically relevant ethnic groups in Africa and Asia, their access to executive power, and on armed organizations that claim to represent them. I use within-country variation in population share to proxy for group strength. The empirical findings strongly accord with the predictions of the theory. I then structurally estimate the model parameters and explore policy-relevant counterfactuals, including the effects of democratization, changes in military capacity, financial aid, sanctions, and quotas.