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Conflicts and Peace Dividends in Developing Countries: A Comparative Analysis

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  • Hippolyte Fofack

    (The World Bank)

Abstract

Sub-Saharan Africa's dismal development outcomes-growth collapse and declining real income-are often used to highlight its sharp development contrast with other regions of the developing world. Drawing on a large cross-section analysis, this paper shows that Africa's underlying dismal growth performance can be largely accounted for by high political risk and uncertainty which undermined investments and growth prospects in the region over most of the post-independence era. This hypothesis is further supported by empirical evidence. In particular, counterfactual simulations based on a variation of neoclassical growth models and under the hypothetical equalization of political risk profile alternative result in large economic returns, reflected in the significantly higher level of aggregate output and income in the subset of conflict-affected countries. Income levels get even higher when the hypothetical reduction of political risks alternative is accompanied by sustained increases in capital accumulation.

Suggested Citation

  • Hippolyte Fofack, 2011. "Conflicts and Peace Dividends in Developing Countries: A Comparative Analysis," Journal of African Development, African Finance and Economic Association (AFEA), vol. 13(2), pages 237-272.
  • Handle: RePEc:afe:journl:v:13:y:2011:i:2:p:237-272
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    More about this item

    Keywords

    Africa; Conflict; Political risk; Growth;
    All these keywords.

    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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