The Effect of Food and Energy Security on Political Stability


Master's Thesis, 2020

66 Pages, Grade: 10


Excerpt

Table of contents

1 Introduction

2 Review of Literature
2.1. Review of theoretical literature
2.1.1 Energy Security
2.1.2 Food Security
2.1.3 Political Stability
2.2. Review of empirical literature

3 Research Design
3.1 Hypothesis
3.2 Panel methods
3.3 Methodology
3.4 Data
3.4.1 Independent variables
3.4.2 Dependent variable
3.5 Global Peace Index

4 Results and Discussion

5 Conclusion

Acknowledgment

References

Appendix A: Additional Figures and Tables

List of Figures

Figure 1: Annual Imported Crude Oil Price

Figure 2: Annual World Food Price Indices

Figure 3: The new tested variables

Figure 4: Average Food Deficit worldwide sample

Figure 5: Average Energy imports worldwide sample

Figure 6: Global Peace Index worldwide sample

Figure 7: World map of global peace ranking

Figure 8.a: Marginal effects of food deficit

Figure 8.b: Marginal effects of food deficit

Figure 9: Relationship between average FD and GPI index (2008-2016)

Figure 10: relationship between average RL index and GPI (2008-2016)

List of Tables

Table 1: Worst countries in GPI ranking

Table 2: Explanatory Variables and Their Expected Signs

Table 3: Data Summary

Table 4.a: Regression results of fixed effect Model (part1)

Table 4.b: Regression results of fixed effect Model (part2)

Table 5: Last Regression results of fixed effect Model

Table 6: Average marginal effect of food deficit

Table 7: Detailed Data Description

Table 8: Correlation Matrix of Used Variables

Table 9: GPI index composition

List of Abbreviations

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Abstract

Since both food security and energy security are countries’ strategic objective, this study typically advocates a deep understanding of the concept of political stability to incorporate food and energy security as a new pillar of conflict management based on an empirical understanding of the nexus and its effect. We used food deficit as proxy for food security and energy imports for energy security from the World Bank database. Using the panel fixed effect method on data for more than 150 countries from 2008 to 2016, we identified a highly significant positive effect of economic growth, tourism and high institutional quality on stability. Destabilizing factors were also detected such as corruption and arable land scarcity. The negative effect of food insecurity was illustrated after the introduction of the squared term of food deficit. Energy imports also have a destabilizing effect. These results for the effect of food and energy security effect holds robust to various control of other determinants in our regression. This study calls for more attention to the energy and food strategy within a country. Keeping peace and stability in the world will require development effort and technological exchange between countries in terms of food strategy and renewable energy plans. These measures will boost economic growth and improve the quality of institutions which will help fighting corruption.

Key words: Political Stability, Food Security, Energy Security, Fixed Effect, Panel Data.

1-Introduction

Suffering, mutilation and death of human beings are the most obvious and important effects of all conflicts, as well as natural disasters. Yet, material losses are also important because they reduce the livelihood and recovery capacities of conflict survivors. Moreover, in many cases, the indirect effects of conflict cause more deaths than direct violence. It has been found that generally the indirect costs of war are greater than its direct costs and persist long after the end of the conflict. Instability and conflict affect many economic sectors such as reducing foreign exchange earnings, which can have serious consequences for development and food security. Indeed, global population growth combined with the effects of climate change on agriculture pose the risk of a Malthusian trap to humanity that can only be avoided by a more efficient and sustainable production system. Energy security policies and climate policies are often considered as two sides of the same coin, their objectives being at least complementary, if not identical.

In the year of 2000 the Millennium Summit of the United Nations established eight international development goals. At that time the strategic plan was to work on realizing these objectives by the year 2015. The determined goals were fighting poverty, improving education, promoting gender equality, improving the health situation of people in the world, ensuring sustainability and especially encouraging strong worldwide partnership for development (MDGs, UN 2015). In order to assess this MDGs 2015 plan and help understanding why some outlined objectives are still not reached in a satisfactory manner, this study will contribute to the path of scientific recommendation to policy makers and strategic planners. To help achieving these goals in the future there is a need for understanding how stability could be realized.

Over decades food and energy have been vital and essential elements for the well-being of all humanity. Their importance depends on two dimensions which are quantity and quality. The quantity could be reflected by the availability of these resources and the quality part by its effects (environmental effects, like CO2 emission for energy and the nutritional aspect of food and its effects on the human body). These two relevant components could play a big role in shaping the relationship between people and even countries. Derived from the Latin word “confligere” which means strike or conflict, food and energy might be one of the causes of conflict.

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Kimbrough et al. (2017) in their review paper about war and conflict from an economic perspective have defined conflict as follows: “A conflict is a situation in which agents choose inputs that are (i) costly both to themselves and relative to some socially efficient optimum (ii) in pursuit of private payoffs framed as wins and losses.” Every country wants to have safe and permanent access to energy and control over market prices for food. Analyzing conflict and peace using the Game Theory approach where two or more players try to maximize their utility could highlight the importance of the effect of the two commodities discussed above on peace and stability. The importance of the addressed topic derived from the fact of understanding political stability and its determinants in many countries. Without a stable state, a conflict could arise leading to tragic loss of life and physical destruction as well as economic damage. Here we are trying to investigate the relationship between stability and the two concepts of food and energy security.

Energy security is one of the rising subjects in modern economy as one of the grand challenges on a global level. All economic sectors rely on energy costs and availability. Renewable and alternative energy has been one of the active interesting fields of research during the last century due to many reasons, such as reducing dependency on oil, protecting economic growth, ensuring stability from price fluctuations and establishing sustainable energy plans. Ensuring continued and low tariff supply of energy and less environmental damage has led to the rising importance of the energy security concept.

The exponentially growing demand for energy in the last decades coupled with the concentration of oil in the world in just a few countries made the world more instable in terms of peace. MENA as one of the richest oil regions in the world is characterized by many conflicts and political instability. With the same growing demand for food over time as the world’s population will reach almost nine billion in 2050 (FAO, 2009) the security concept is ever rising in importance as well. In the long run, additional factors came on top too like the demographic transition in the world financial instability and the rising concept of climate change. All this growing demand in terms of food and energy highlight the importance for every country to design their own policy or to regroup in specified organizations like OPEC.

A good strategic plan for energy security as well as food security should be based on a good price stabilizing system along with continued supply of both goods over time. This study implies the importance of the concept of ES and FS by identifying its effect on stability and peace. In the light of the above, the purpose of this work is to assess the linkages between food and energy security and political stability or peace within a country.

The motivation to address this topic came from the clear gap in the current literature of addressing the effect of the energy-food nexus on stability as well as from the will to contribute to the mechanism of understanding conflict management processes.

The following parts of this work will be organized as follows: the second section will look at the existing studies by analyzing both the theoretical and the empirical arms of the literature. A detailed definition and explanation of the three used concepts FS, ES and PS will also be presented in this part. For the third section we will present our research design which includes the formulation of a tested hypothesis, used methodology as well as data description. A detailed presentation of the new used indicator for stability which is the GPI index will also be provided in this part. In the last two sections of this study we will discuss the empirical results and conclude with recommendation and perspective.

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2- Review of Literature

2.1. Review of theoretical literature 2.1.1 Energy Security

Ever since the Industrial Revolution, energy has started to be a crucial factor in modern economy. Today the lack of access to energy is a major obstacle to the development of many countries. Energy related topics have become a strategic focus of state economic development policies. Many events also have shown the significant effect of energy related issues in the world. For example the embargo imposed by OPEC-States since the Israeli-Arab conflicts of the late 1960s resulted in a quadrupling of oil prices and through that plunged the world economy into recession between 1973 and 1975. This recession had serious consequences such as the gloom of the economy in the 1970s and inflation which lead to serious economic and social damage.

Figure 1: Annual Imported Crude Oil Price

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Figures 1 illustrate annual oil prices from 1968 to 2018 (dollars per barrel). The first oil shock in 1973 was a consequence of the Arab-Israeli Yom Kippur War as presented the first pick in the graph. The second, in 1979, resulted from the Iranian crisis.

The disagreement between OPEC members resulted in a decrease in demand, the counter-shock of 1986 leading to the cancellation of the effects of the second shock. The Gulf War in 1990 caused a short time, less than a year shock, characterized by high prices. Finally, the upward trend of the 2000s accelerated the price per barrel from 53$ in early 2007 to a high of 140$ in July 2008. Again, a sharp drop brought the price down to 43$ in early 2009, before it quickly rose to more than 60 dollars a barrel. As shown in the graph, the oil price at the beginning of 1968 is multiplied by 5 in 1980. Between 1988 and 2003 prices were relatively low comparing to the previous period. What might be interesting in this figure is that oil prices are characterized by unexpected up and down movements. This price fluctuation affect the other economic sectors negatively. Some policies were adopted to hedge against this volatility such as compensation budgets. Still either a positive or negative oil shock in prices could harm all economic activity as well as food prices. All this has lead the world to look at the energy problem from another angle like energy source diversification.

Immediately after the oil crisis of the seventies, energy security concepts, specifically concerned with the availability and affordability of crude oil, have emerged in the area of global energy security and the macroeconomic stability program (Ilie, 2006). Initial efforts to strengthen energy security related to oil led to the creation of the International Energy Agency (IEA) in 1974, with the main objective of helping countries to coordinate collective responses to major disruptions to the supply of oil by the release of emergency oil stocks. The IEA has coordinated a series of measures on security, including the strategic management of reserves in Western countries to enable them to protect their economies from future oil problems (IEA Report, 2014). In recent years, with the cooperation of OPEC member countries on the stability of oil markets and the growing interest in maintaining a stable global macroeconomic state, the objectives of the IEA are oriented towards greater ideas such as energy security, economic development and environmental awareness.

The concept of energy security also concerns other limited energy resources such as coal and natural gas. The importance of oil in energy plans comparing to other energy sources come from its big share in energy consumption. Countries that have not taken part in the IEA framework have pursued their own energy security policies.

For example, the successful diversification model developed in Brazil after the global oil shock highlighted traditional energy sources, particularly used in the transport sector, which have become very important in Brazilian society.

Energy security can be better understood if viewed within a wider context than the supply of oil, taking into account the production and distribution of electricity and the use of bioenergy sources, traditional and processed biomass. Biomass has a primarily local origin and is partly generated by biological processes in the context of long-term harvesting and environmental regeneration. The generation of electricity from clean energy sources such as hydroelectricity is governed by hydrological models linked to the risks inherent in climate change and drought. Dependence on imported energy sources entails serious risks since most of the factors that determine the supply of these sources and their prices are beyond the control of the importing States.

Scheepers et al., (2007) presented energy security as a risk of shortage in energy supply, which is either a relative risk (price changes) or a physical break in the supply of energy. This is why energy security is defined as the continuous supply of energy to consumers. Loschel et al., (2010) summarized energy security in many studies to build the physical availability of energy, energy prices and instability. By extending the sense of energy security to long-term concerns, Jansen and Seebregts, (2010) view energy security as an approximation of a certain level at which the population in a given region has unlimited access to fossil fuels and energy carriers based on fossils. The Clingendael International Energy Program (CIEP, 2004) still defines energy security as the physical and permanent availability of energy in sufficient quantities and at affordable prices, by differentiating themselves from a focus on the physical availability of energy for more cost-effective interpretations.

The European Commission (EC, 2001) targets long-term security by guaranteeing customers the physical and unlimited availability of energy products on the market at affordable prices for the well-being of citizens and the smooth running of the economy. In the same direction, the (IEA, 2007) presents energy security as physical availability of energy supply to meet demands at specified prices. This implies that energy insecurity stems from the physical disruption of supply and energy price surges. Other scholars like (Ang et al. 2015) in their review paper see energy security as a composite of seven dimensions that should be included to better define the concept.

The dimensions are respectively: energy availability, infrastructure, energy prices, societal effects, environmental effects, governance and energy efficiency.

The key to ensuring a better energy security plan in an interconnected global economic system that is dependent on increasing energy consumption – and given the fact that international energy trade is expected to reach 142% in 2050 (Kruyt et al., 2009) – is diversification of energy sources, easy and safe access, inclusion of clean and renewable energy, better policy to hedge against price fluctuations as well as efficient and economic use of available resources.

Adding to the huge growing demand is the fact of unequal distribution of energy resources. So energy security is becoming a global concern. The impact of energy insecurity on economic systems is negative, but the extent to which regions and countries are willing to reduce these impacts differs considerably. The concentration of the supply of oil and gas resources in Middle-East and the volatile political environment in these countries aggravate the problem of energy insecurity. It is also clear that geopolitical phenomena’s also determine the state of energy security in the world. The war in Iraq in 2003, the conflictual situation between Iran and the United States as well as the Arab spring are some recent geopolitical tensions that have had a direct impact on energy insecurity.

The strong relationship between energy and instability can be seen in many examples. Saritas and Burmaoglu, (2016) presented the huge increase in demand for energy over time in the military sector, arguing that during World War II the demand was going from 1 gal per solider per day up to 4 gal per solider per day in the desert storm operation in the 1990s. Another example for the importance of energy in warfare, the Pakistani-American oil crisis in 2011 that lead to the US providing a formal apology for the killed Pakistani soldiers after the Pakistani reaction of cutting oil supplies for US troops in Afghanistan back then. The Pakistani action cost the US around 700$ million (World News Tomorrow, 2013).

On the other hand, improving energy security in a country could bring about some positive change including social and economic development, poverty reduction, private sector modernization and enhancing commercial balance. To test Energy security in our study we have used the variable of Energy imports provided in the WB data. We chose this variable as it expresses the desired effect to be tested and due to its availability in the time interval.

Bert Kruyt et al., (2009) show in their review paper that there is no ideal indicator for energy security as each existing one has its own limitations. This variable will be presented in more detail in the coming parts of this study.

2.1.2 Food Security

Despite considerable efforts over decades, today more than 900 million people are experiencing food insecurity and daily hunger in this world. 75% of these poor people live in rural areas. While Asia has the highest number of hungry people in absolute terms, sub-Saharan Africa, with an average of 34%, has the highest proportion of its population in food insecurity. In West Africa – one of the most affected regions – due to very large population growth and the degradation of natural resources as a production base, the number of people in food insecurity is likely to increase to between 100 million and 150 million in 2025, (FAO, 2015).

Global food security is a major issue for public policy, with the reduction of poverty and hunger being the first Millennium Development Goal (MDG). The state of natural resources, especially water, is increasingly becoming a limiting factor in meeting this challenge. Thus, the articulation between natural resources management and food security tends to take more and more space on the international political agenda. Given the fact that the world needs to produce more food with fewer resources while eliminating wasteful practices and policies is the harsh reality. Demographic changes, rising incomes, climate change, bad policies and inefficient institutions are leading to a shortage of natural resources. Rising energy prices have a negative impact on fuel and fertilizer costs for farmers, increase the demand for biofuel crops relative to food crops, and increase in the price of feedstock. Agriculture is already part of a context of land scarcity both in terms of quality and quantity: the best arable land in the world is already under cultivation and unsustainable agricultural practices have led to a significant deterioration of the soil. Applanaidu et al., (2014) used a VAR model in the case of Malaysia to show that food insecurity will also depend on population growth. In their result they have highlighted one of the intersections between food and energy security with their prediction of the negative impact of biodiesel production on FS objectives in the long run. The key factor of this interconnection is the land use. According to the authors the suggested solution in the case of Malaysia’s overexploited land were agriculture investments offshores.

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The definition for FS by the Food and Agriculture Organization (FAO) holds that “food security, at the individual, household, regional, national, and global levels is achieved when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life” (FAO, 1996).

In fact, four components are identified: physical and the economic access, use (how the body optimizes different foods, hygiene), diversity of diet, distribution of food to and the stability of the three dimensions over time (FAO, 2008c). This widely accepted definition focuses on the following aspects of food security: Food Availability, Access to food, Use (which is use of food in an adequate diet) and Stability (which translates into permanent access to adequate food). To ensure this basic right, the concept of food security has been conceptualized by the FAO to eradicate hunger in the world. It refers to the four dimensions, however there still exists some ambiguity because it does not specify the origin of supplies, which may be local or international. This implies that each country must have a balance between national agriculture and the use of foreign trade according to its potential.

Today, armed conflict and malnutrition in the world are commonly seen attached to many regions leading to the destruction of more livelihoods, higher migration rates, and increasing poverty. Wilner Jeanty and Hitzhusen, (2006); showed the negative effect of conflict on food security in developing countries using the instrumental variable approach. Maystadt et al., (2014), also used a cross-sectional method on data from 1960 to 2010 to prove that with all the other drivers of conflict that came on line, food security is the key element of conflicts in the MENA region. They also concluded that more food security plans would secure the peaceful transition of the region.

Ensuring food security in the context of global change (climate, energy, population, etc.) is therefore probably the most important challenge to be met in the coming decades. This immense challenge will involve a combination of food security and water security considering their strong interrelations. Again the fight against food insecurity differs from the idea that the problem of hunger can be overcome simply by increasing agricultural production and by the need to fight poverty in general. Increasing agricultural production is important in itself, but it will not guarantee the well-being of the poor, who cannot afford to buy food, or small farmers who do not always have enough capital to buy means of production or lack adequate access to credit, water or a suitable infrastructure.

Reducing poverty is, of course, a primary goal in itself, but it does not guarantee that those who are hungry benefit as much as other poor people, because hunger is not only a consequence but also a cause of poverty. A conception of trade liberalization based on the right to food by the reduction of barriers to trade might lead to an improvement of the situation in the countries suffering from famine or food insecurity.

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Source: FAO, 2018

Figure 2: Annual World Food Price Indices

Figure 2 illustrates world real food prices between 1990 until 2018. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. The weighted index reflects the prices of international markets of the five major groups of food products (meat, dairy, cereals, oils, sugar). The effect of the 2008 crisis can be seen clearly in this graph resulting in increased food prices. After reaching record levels in mid-2008, global food prices are generally on a downward trend, but many developing countries still face higher prices and much higher prices than in 2002 when they began to increase. Unstable or rising food prices have clearly increased the vulnerability of the urban and rural poor, whose purchasing power has been seriously eroded, resulting in both quantitative and qualitative deterioration of food prices.

Rising food prices also have been attributed to a number of causes, including increased demand from the use of agricultural commodities for biofuel production and the economic development of densely populated developing countries such as China. Other indirect reasons are the rising of energy costs and prolonged drought in some of the major producing countries.

The same persistent problem of intermediary causing more speculation in international commodity markets is also an issue. Energy security plans need to take into consideration this food price volatility. The new trend of biofuel production seems to contribute in understanding the interrelation between food and energy. In the next paragraph we will provide a brief description of this interconnection.

The Food-Energy nexus has been discussed in many scientific work. The increase in oil demand combined with a decline in supply and stocks has led to a cyclical imbalance. Expansion of biofuels, rising oil prices, and increasingly pervasive speculation in agriculture are all triggers for a global food crisis. Biofuel as a new source of demand for agricultural products may represent an incentive for some developing countries to take advantage of agricultural growth to ensure rural development in general and reduce poverty initially. Biofuel-friendly policies were expected to contribute to energy security and mitigation of climate change through reducing greenhouse gas emissions while addressing the desire to support agriculture. But in the end it turned out to be one of the obstacles for food security in the long run due to its’ competition in land use.

To test the effect of food security on stability we have used the variable of food deficit per person per day provided by the World Bank as a proxy variable. A further description of this variable will be presented in the next parts of this work.

2.1.3 Political Stability

Conflict and violence between groups of people or countries bring about a state of instability. Political stability with its broad definition includes the democratic level of country, absence of violence and how far people obey and respect the laws in the society. Ake, (1975) defines PS as follows: “Political stability is the regularity of the flow of political exchanges”, meaning the need for regular exchange to avoid dictatorship. Stability does not mean an unchangeable and constant regime over time, but rather a stable state with no violence and conflict.

Political stability has a major effect on a country’s stability spanning from the economic to the social dimension. Bjorvatn et al., (2012) have found that political power balance could dampen the effect of oil resource curse and ensure economic growth within a country. Radu, (2015), has also concluded that political stability is a key factor for sustainable economic development. The effect of political stability and instability has been and still is one of the main topics in the literature.

Uddin et al., (2017) in their study, using the dynamic GMM and quantile regression methods on 122 countries have proven political stability to be one of the catalyzing factors for better economic performance and growth. Along with other factors (Al-Mulali and Ozturk, 2015) have also presented how political instability could increase environmental degradation using a sample of 14 MENA countries. Political stability could also reduce inflation and help stabilizing prices in a country. (Mazhar and Jafri, 2017) in their work about the determinants of inflations using data for 122 countries between 1999 and 2007 have found that political stability and inflation have a negative relationship.

Weak institutions due to corruption or political instability can hinder economic development. Absence of political stability could induce many risks for a country, despite the violence the other threats that a country could face is terrorism. Wu MengYun et al., (2017) have shown in their study that political instability favor terrorism attack to a country, which affect the financial sector and influence negatively investment as a major factor of economics growth. The study has been conducted for the case of Pakistan during the period from 2001 to 2014, considering the effect of the financial crisis of 2007/2008.

Another interesting study from the recent literature on political stability is by (Farzanegan and Witthuhn, 2017). In their paper the authors have shown how corruption coupled with a certain threshold of youth could help to increase political instability. Given the importance of political stability and peace keeping; (Bjorvatn and Farzanegan, 2015) showed how resource rent was used to keep stability in oil rich countries during the Arab spring movement. Richard Jong-A-Pin, (2009), also investigated the different dimensions of political instability and its effects on the economic growth in a country using the dynamic panel system Generalized Method of Moments model (GMM) technique. His again analysis leads to the importance of stability as the instable state has a significant negative impact on growth.

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To measure political stability there are some indicators that could be used, like the International Country Risk Guide published by the Political Risk Services (PRS) group or one of the World Governance Indicators (WGI), which is Political Stability and Absence of Violence (see, for example; Bjorvatn and Farzanegan, 2013, Witthuhn and Farzanegan,2014). To reflect political stability in our study we used a new variable compared to the one used in previous studies. The proxy variable used is the Global Peace Index from the IEP institute. A further description will be provided in the following parts of the thesis.

Table 1: Worst countries in GPI ranking

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Table 1 above presents the last countries in the ranking list of 2017 according to their GPI index. We see clearly that Syria is on the bottom of the list. Syria in terms of stability is considered to be the worst as the conflict has started during the Arab spring movement and persists until today. We can see that most of the listed countries are from the MENA region. One of the main characteristic of this region in the world is that it’s scarcity in terms of water and its richness on oil. Oil and stability have been investigated in the literature as well. Usually the stability and resource relationship has taken the form of both side in the literature.

The question of resource or specifically oil has been investigated as of blessing or curse. Resource curse has been identified by many scientist; see for example (Mehlum et al., 2006; Papyrakis and Gerlagh, 2004; Mobarak and Karshenasan, 2012) as their main arguments and analysis were based on the economic impact of the resource wealth within a country. Resource rich countries have been identified to have slow economic growth. Results show that there exist a negative relationship between growth and natural resource abundance. This result was explained in reality through transmission channels. Some of the discussed channels were investment and corruption as the negative resource effect in a country will decrease entrepreneurship and might increase corruption. This negative effects on growth and investment are indirectly related to stability.

A stable country seems to have a better economic situation according to the literature. Some other scholars proved the blessing hypothesis of natural resource (for example Alexeev and Conrad, 2011; Brunnschweiler, 2008; Brunnschweiler and Bulte, 2008; Pendergast et al., 2008). They argued that resource rent in a country could help boosting economic growth. The surplus generated by this resource could be used in different economic sectors to allow for more technological progress. Resource rent’s positive impact on economic development in a country might influence stability positively. For example Australia and Norway have been ranked 12 and 14 respectively in terms of the GPI index in 2017. These two resource rich countries succeeded to reach higher stability and economic growth comparing to the ones listed in Table 1. Stability is a result of existing conditions in a country. Reaching stability level should be the objective of every government and political system. To attend this objective a deep analysis on understanding the mechanism and transmission channel is needed. In the next part we will go through the literature to identify the factors that affect stability according to existing previous work.

2.2. Review of empirical literature

In this part we will go through the related Empirical studies in the literature. Many determinants of stability have been identified. Land is one of the important factors that influence the stability in a country and on the international level as well. Boone, (2017) in her paper about soil conflicts in African countries showed that the quality of a state’s institutions matters in solving conflicts over land.

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Land scarcity is one determinant in conflict between land owners and immigrants. For this reason we are going to consider percentages of arable land per country over the selected time interval as control variables in our analysis.

High fertility rate and rapid demographic growth might affect both the economic development and the PS in a country. Assaad and Roudi-Fahimi, (2007) also proved the negative effect of a high fertility rate on the MENA region. On the other hand some scholars like (Bloom & Williamson, 1998) and (Bloom et al., 2000) have shown that the demographic transition could be the reason of economic growth and therefore more stability, given the example of Asian countries. But what still remains persistent is that an increase in the working age population with poor economic conditions leads to more unemployment. According to (Fearon and Laitin’s, 2011) internal conflict could be fueled by internal changes like high unemployment and migration that occur over time within a country.

The rise of population density caused by high fertility rates and immigration waves could increase ethnic heterogeneity and competition between groups. The theory of high fertility resulting in a rapid increase in population density and high demand for goods and jobs will also be tested in our work as one of the determinants for stability across time and countries. The unemployment factor will also be included in our study. Qiong and Junhua, (2015), investigated the relation between military and non-military expenditure in regard to unemployment rates in China using the Autoregressive Distributed Lag (ARDL) model approach for data, covering the period from 1991 to 2013. Their main finding was that defense spending increases unemployment rates where non-military spending decreases the rates allowing for more work opportunities. As military spending as a share of GDP we could see that stability promoting less defense spending could lead to low unemployment leading to more spending in the other economic sectors, like agriculture and industry.

Openness and globalization have also been tested as a main variable in their relation to stability. Amavilah et al., (2017) conclude in their paper, about the effect of globalization on peace and stability in 53 African countries from 1996 to 2010, using three stage regression techniques that a positive and significant effect of trade on peace and stability exists. More trade, more cooperation and less conflict. Also (Goklany, 2002) see that globalization reduces hunger. Globalization expressed by trade or FDI will reduce barriers, resulting in a more liberated market, which will help achieving the food security goal.

Another strand of literature, like (Rodrik, 1997), presented a negative relationship between foreign direct investment and stability that might transmit an external shock to the host countries, which influence peace and stability. This result was explained due to the poor quality of institutions. Messer and Cohen, (2006). Also explained in their work how openness could influence market prices and increases volatility which threaten the food security objective.

Corruption, inequality and dictatorship are all factors that might influence stability as well and like so stimulate conflict in a country. David and Bar-Tal, (2009), argued that economic inequality and injustice mobilize conflict and reduce peace. Also (Haass and Ottmann, 2017), investigate in their study that power sharing, foreign aid and natural resources in post conflict countries could increase corruption, using time series and a cross-sectional analysis of post-conflict situations during 1996-2010. These results is that the high corruption level could affect the long term economic and institutional quality of a country. Another study on the effect of corruption on stability is by (Fjelde, 2009).

It has shown that people in power in a corrupt government could use natural resource rent in their favor in order to keep or “buy stability”. For example resources like oil rent have also been used by governments of oil rich states to buy peace and to stay in power. For example the government in Kuwait has distributed money, almost about a 1,000 Kuwaiti dinars to all the citizens with free food staples for 13 months (Calderwood, 2011).

Aguirre, (2016), also utilize an empirical approach using a theoretical institutional technique to prove that a higher risk of future conflict is related to lower constraints imposed on the executive or the elite. More constraints and pressure on the elite will lead to more redistribution as the main goal is the reduction of revolutionary impulse which might threaten their present status. This was seen obviously after the Tunisian revolution in 2011 that catalyzed the start of a series of events and resulted in changing the geopolitical situation of the MENA region. Ethnicity and cultural dimension could have a certain effect on political stability as well. Corvalan and Vargas, (2015) have used a world sample of countries from 1960 until 2000 to investigate the relationship between segregations and conflict by estimating a cross sectional model. The main result of the empirical analysis was a robust correlation between both language and ethnic segregation and conflict; and especially no evidence of the effect of religious segregation on conflict.

[...]

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Details

Title
The Effect of Food and Energy Security on Political Stability
College
University of Marburg  (Faculty of Business Administration and Economics Economics & Institutions)
Grade
10
Author
Year
2020
Pages
66
Catalog Number
V882608
ISBN (eBook)
9783346212962
ISBN (Book)
9783346212979
Language
English
Tags
Political Stability, Food Security, Energy Security, Fixed Effect, Panel Data
Quote paper
Mohamed Taher Sassi (Author), 2020, The Effect of Food and Energy Security on Political Stability, Munich, GRIN Verlag, https://www.grin.com/document/882608

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