The impact of violence on economic growth: evidence from Colombia’s armed conflict

This paper quantifies the impact of Colombia’s internal armed conflict on economic growth between 1976 and 1993, a period marked by escalating violence fueled by drug production and trafficking. The rise of the Medellín Cartel, led by Pablo Escobar, and the Cali Cartel, led by the Rodríguez Orejuela brothers, intensified the conflict, triggering widespread violence and terrorist attacks. Escobar’s death in 1993 marked a turning point, coinciding with a gradual decline in terrorism despite the persistence of the conflict. Using a synthetic control approach, we estimate that this phase of the conflict reduced economic growth by an average equivalent to 20% of per capita GDP for the period, resulting in an accumulated loss of $25,542 per inhabitant (PPP, 2011 dollars). In the absence of violence linked to guerrilla groups, paramilitary forces, and drug cartels, Colombia’s per capita GDP in 1993 would have been 30% higher. These results are robust to extensive sensitivity analyses, underscoring the severe economic consequences of prolonged violence.