UC San Diego

I investigate the long term effects of the environment and geography on the capacity of states to generate revenue in the form of taxation and to deter violent, internal challenges to their authority. I argue that environmental and geographic factors affect the incentives for building a fiscal relationship between state and society. The theory casts the emergence of a fiscal contract as the outcome of bargaining between societal actors, who have a collective comparative advantage in the creation of wealth, and a ruler, who has a comparative advantage in coercion and provision of services. I argue that the environmentally determined resource bases in the preindustrial era of state formation affected this bargaining environment. Where agricultural production was comparatively diffuse, as in temperate zones, the incentives were stronger, whereas when agricultural production was comparatively concentrated, as in tropical zones, the incentives were weaker. In addition, terrain affected the incentives to form a strong fiscal contract by affecting the transaction costs associated with policing any bargain between state and society. As the mountainousness of terrain increases, the fiscal contract is expected to be weaker. The remainder of the dissertation sets about testing the broad implications of this theory for three empirical questions. First, I use data on 157 countries over the time period 1980-2002, to estimate the impacts of geography and climate on the tax/ GDP ratio, finding both to be strong, robust covariates of the tax/GDP ratio. Second, I challenge the conventional discourse relating the environment and geography to civil conflict, arguing and demonstrating that the primary effect of geography on conflict is mediated by its effect on the strength of state institutions, operationalized as the fiscal contract. Using two-stage probit models, I demonstrate that the tax/GDP ratio, as instrumented by measures of climate and terrain, is robustly and negatively associated with civil conflict incidence. Third, I inform conjectures about the future of climate and conflict by estimating the impact of long term and short term sources of environmental variability on the onset of civil conflict in Sub-Saharan Africa