Linking war, natural resources and public revenues: the case of the War of the Pacific (1879-1883)

Oriol Sabate Domingo, José Peres-Cajías

Research output: Working paper/PreprintWorking paper

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Abstract

We argue that wars over natural resources, even if they are limited in their military scope, can have long-term consequences on the level and composition of public revenues. Military success in a resource war may lead to the annexation of natural resource-rich areas from enemy combatants, which provides the winning coalition with valuable and easy-to-tax sources of income. This, however, might discourage new investments in administrative capacity that jeopardize the possibility to establish complex and politically costly taxes in the long-term. This was the case in Chile after it took over the Bolivian and Peruvian coastal regions during the War of the Pacific (1879-1883). In Peru, by contrast, the loss of its nitrate-rich areas brought its fiscal system to the brink of collapse. The impact of the conflict on the Bolivian fiscal system was milder owing to its initial low level of state capacity to control these coastal regions.
Original languageEnglish
Pages1-54
Number of pages54
Publication statusPublished - 2020 May

Publication series

NameSTANCE Working Paper Series
No.1
Volume2020-2021

Subject classification (UKÄ)

  • Political Science

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