The Elusive Peace Dividend of Development Policy: From War Traps to Macro-Complementarities

This paper reviews the literature on civil conflict and development with an angle on the socio-economic consequences of violence and promising policies for fostering peace. We make four main points. First, one of the reasons why conflict is still often overlooked as key factor for development is that conflict costs are typically under-estimated, in particular for shadow costs of deterrence. Second, there are several types of war-traps that hold countries back -- both economically and politically. Third, for breaking these traps, policies must be calibrated to address jointly both poverty and social tensions, there being a strong macro complementarity between peace and development objectives. We document how "single-minded" policies that ignore this dual challenge can spectacularly fail, and discuss in depth a series of particularly promising policies. Fourth, we highlight the increasing potential of novel data collection methodologies and the need of policy evaluation tools in violent context.