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Economics of Armed Conflicts and Governance: An Empirical Study Focusing on South Asia

Author

Listed:
  • Ullah Khan, Hidayat

    (Department of Economics, National University of Modern Languages (NUML), Islamabad)

  • Rehman, Leena

    (Department of Economics, Kohat University of Science & Technology, Pakistan)

  • Khan, Alam

    (Department of Economics, Kohat University of Science & Technology, Pakistan)

  • Khan, Hameed

    (Department of Economics, Kohat University of Science & Technology, Pakistan)

Abstract

This study examines the effects of governance on armed conflict and the associations between economic factors, external finances (remittances), natural calamities, and armed conflicts. Panel data are used covering the South Asia region from 2002 to 2018, applying the logit and ARDL models. Based on the logit analysis, the results show that government effectiveness, political stability and absence of violence/terrorism, and regulatory quality, the rule of law, and droughts/floods have a negative relationship with armed conflict. On the other hand, population, remittances, and voice and accountability have positive association with armed conflict. Based on ARDL estimations, government effectiveness, a proxy variable for governance, political stability and absence of violence/terrorism, and the rule of law have negative and highly significant association with armed conflict. It is implied that good governance can reduce the likelihood of armed conflict, while population and remittances can fuel armed conflict. Moreover, natural calamities have an inverse relationship with armed conflict. Surprisingly, conflicts help increase the voice of and demand for accountability by general public in the conflict zone.

Suggested Citation

  • Ullah Khan, Hidayat & Rehman, Leena & Khan, Alam & Khan, Hameed, 2021. "Economics of Armed Conflicts and Governance: An Empirical Study Focusing on South Asia," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 28(2), pages 82-106, December.
    • Handle: RePEc:ris:apecjn:0061
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    Keywords

    armed conflict; governance; political stability; ARDL; South Asia;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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