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We study competing investments in human capital by governments and insurgent groups. The government balances the benefit of a higher-skilled population with the risk that educated citizens will defect and fight the regime. Insurgents have the advantage of indoctrinating part of the population, ensuring support but at the cost of reduced education. Our framework highlights a novel effect of strategic indoctrination, which strengthens insurgent capacity. Specifically, we find indoctrination increases the amount of anti-regime activity, but not necessarily the insurgency's effectiveness. Furthermore, we identify conditions under which the government underinvests in education to balance the risk between educating citizens -- making them more highly skilled for economic participation -- versus inadvertently strengthening future insurgent effectiveness. We develop a theory linking investment in education under the threat of insurgency to intentional under-provision of education, with implications for the effectiveness of insurgent and counterinsurgent activities. We then consider the effect of foreign investment in the education sector and its downstream effects on both domestic education expenditures and conflict outcomes. We examine the possibility that foreign aid may substitute for government provision of education in times of internal conflict, leaving the regime without the institutional capacity to develop human capital after the cessation of hostilities.
Todd Lehmann, University of Michigan, Ann Arbor
Jessica Sun, University of Michigan, Ann Arbor
Scott Tyson, University of Michigan, Ann Arbor