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

Sabate Domingo, Oriol LU and Peres-Cajías, José (2020) In STANCE Working Paper Series 2020-2021(1). p.1-54
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... (More)
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. (Less)
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author
and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
fiscal capacity, warfare, nineteenth century, Latin America, War of the Pacific
in
STANCE Working Paper Series
volume
2020-2021
issue
1
pages
54 pages
project
State-Making and the Origins of Global Order in the Long Nineteenth Century and Beyond
language
English
LU publication?
yes
id
3faca7e7-aa05-4cf2-8e2e-99901833fbfd
date added to LUP
2020-05-11 10:33:03
date last changed
2021-03-22 21:29:31
@misc{3faca7e7-aa05-4cf2-8e2e-99901833fbfd,
  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.}},
  author       = {{Sabate Domingo, Oriol and Peres-Cajías, José}},
  keywords     = {{fiscal capacity; warfare; nineteenth century; Latin America; War of the Pacific}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{1}},
  pages        = {{1--54}},
  series       = {{STANCE Working Paper Series}},
  title        = {{Linking war, natural resources and public revenues: the case of the War of the Pacific (1879-1883)}},
  url          = {{https://lup.lub.lu.se/search/files/88003167/WP_41_Sabate_and_Peres_Cajias_Linking_War_Natural_Resources_and_Public_Revenues_The_Case_of_the_War_of_the_Pacific_1879_1883_.pdf}},
  volume       = {{2020-2021}},
  year         = {{2020}},
}