Rebel Primary Commodity Markets, Price Shocks, and Supplier Victimization

Rebel organizations often benefit from the sale of primary commodities. However, producing these commodities may require labor from noncombatants. Rebels provide security and payment to civilian suppliers, but their ability to do so depends on consistent profits. How, then, do price shocks to labor-intensive primary commodities undermine rebel–supplier relationships? I hypothesize that negative commodity price shocks lead cash-strapped rebels to ensure suppliers’ loyalty by substituting coercion for positive incentives. Conversely, states seek to limit rapid increases in rebels’ profit while avoiding the reputational costs of civilian victimization. Thus, victimization of rebel suppliers from groups such as pro-government paramilitaries is hypothesized to increase after positive commodity price shocks. I test these hypotheses with a new dataset covering 1999–2007 that combines monthly US STRIDE (System to Retrieve Information from Drug Evidence) data on cocaine price with municipal-level data from the Colombian Centro Nacional de Memoria Histórica about the FARC (Fuerzas Armadas Revolucionarias de Colombia) and paramilitary groups’ use of civilian victimization.

Rising Global Inflation and Consumer Prices in the People's Republic of China

Although global inflation and commodity prices are on the rise, spillovers to consumer price inflation in the People’s Republic of China (PRC) are expected to be limited. Consumer price inflation in the PRC has been driven mainly by domestic factors during the past decade, while commodity price shocks that led to higher producer costs hardly affected consumer prices. Reasons for these developments include a consumer basket of domestic products, anchored inflation expectations, and system buffers to absorb commodity price shocks. Though contagion risks of higher global inflation and commodity prices to inflation seem limited, possible transmission channels include further rising commodity prices and a shift in inflation expectations in the PRC. This note aims at providing policy recommendations on minimizing inflation transmission channels and containing inflationary expectations.