Measuring the Economic Cost of Conflict in Afflicted Arab Countries

The goal of this paper is to estimate the economic cost of conflict in selected Arab countries by using satellite images and geographical information systems (GIS) methods. Specifically, we employ image-processing techniques to generate data proxying intensity of economic activity at country and sub-region levels. The focus is on four countries: Iraq, Libya, Syria, and Yemen. These are the countries that have been most severely affected in various ways by the widespread wave of civil conflict occurred in the MENA region in the aftermath of the Arab Spring. Certain back-of-the-envelope calculations suggest that GDP and main factors of production are nearly halved in those countries. We use data provided by the National Geophysical Data Center of the United States to compare the night-light intensities before and after the conflict in those four countries. The night-light data serve as a proxy for regional economic activity and are widely used to generate credible economic data—mainly in circumstances where official data either do not exist or are not reliable. We construct indices combining the contrast and dispersion of night-lights within fine-grained geographical regions and then report the time series evolution of those indices both at country and sub-region levels. The estimates suggest that the scale and intensity of economic destruction in the region have been unprecedented in recent history and the extent of destruction is the largest in Syria and Yemen among those four conflict-afflicted countries. We also provide additional insights at sub-region level.