IDEAS home Printed from https://ideas.repec.org/p/eca/wpaper/2013-278946.html
   My bibliography  Save this paper

The Global Economic Burden of Violent Conflict

Author

Listed:
  • Anousheh Alamir
  • Carlos Bozzoli
  • Tilman Brück
  • Olaf J. De Groot

Abstract

Calculating the economic impact of different global challenges such as climate change or disease helps uncover the scale, distribution and structure of their economic burdens. Likewise, violent conflict affects billions of people worldwide, whether directly or indirectly. While the mechanisms for these effects have been widely studied on a case study basis, we set out to test some of the stylized facts relating to conflict effects on a cross-country basis. After suggesting a method for costs estimation that accounts for multiple forms of conflict, we disaggregate our results both by time and region. We find that in the absence of violent conflict since 1960, the level of global GDP in 2014 would have been around 33% higher. When disaggregating these costs by conflict type, civil conflicts are estimated to be by far the costliest. We observe a significant influence on growth up to four years following the end of conflict, although the direction of this effect depends on the intensity of conflict. On the other hand, neighbours suffer almost as much as host countries during conflict, thus showing the importance of mitigating spillovers rapidly. Finally, we find the largest absolute costs to be associated with violent conflict in China and India, while Sri Lanka suffers the largest relative burden (as a percentage of GDP). In contrast, many developed economies actually benefit from participating in conflict on foreign soil.

Suggested Citation

  • Anousheh Alamir & Carlos Bozzoli & Tilman Brück & Olaf J. De Groot, 2018. "The Global Economic Burden of Violent Conflict," Working Papers ECARES 2018-35, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/278946
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/278946/3/2018-35-ALAMIR_BOZZOLI_BRUCK_DEGROOT-the-global.pdf
    File Function: Œuvre complète ou partie de l'œuvre
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David E. Bloom & Dan Chisholm & Eva Jane-Llopis & Klaus Prettner & Adam Stein & Andrea Feigl, 2011. "From Burden to "Best Buys": Reducing the Economic Impact of Non-Communicable Disease in Low- and Middle-Income Countries," PGDA Working Papers 7511, Program on the Global Demography of Aging.
    2. Vincenzo BoveBy & Leandro Elia & Ron P Smith, 2017. "On the heterogeneous consequences of civil war," Oxford Economic Papers, Oxford University Press, vol. 69(3), pages 550-568.
    3. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    4. Çağatay Bircan & Tilman Brück & Marc Vothknecht, 2017. "Violent conflict and inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 45(2), pages 125-144, April.
    5. S. Brock Blomberg & Gregory D. Hess, 2006. "How Much Does Violence Tax Trade?," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 599-612, November.
    6. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    7. Serneels , Pieter & Verpoorten , Marijke, 2012. "The impact of armed conflict on economic performance. Evidence from Rwanda," NEPS Working Papers 5/2012, Network of European Peace Scientists.
    8. Inklaar, Robert & de Guevara, Juan Fernández & Maudos, Joaquín, 2012. "The Impact of the Financial Crisis on Financial Integration, Growth and Investment," National Institute Economic Review, Cambridge University Press, vol. 220, pages 29-35, April.
    9. Vincenzo Bove & Claudio Deiana & Roberto Nistic�, 2018. "Global Arms Trade and Oil Dependence," Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(2), pages 272-299.
    10. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    11. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    12. Gregory D. Hess, 2003. "The Economic Welfare Cost of Conflict: An Empirical Assessment," CESifo Working Paper Series 852, CESifo.
    13. Samir KC & Bilal Barakat & Anne Goujon & Vegard Skirbekk & Warren C. Sanderson & Wolfgang Lutz, 2010. "Projection of populations by level of educational attainment, age, and sex for 120 countries for 2005-2050," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 22(15), pages 383-472.
    14. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    15. Luis A. Gil-Alana & Prakarsh Singh, 2016. "Growth recovery after civil conflict: a fractional integration approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(4), pages 453-479, August.
    16. James C. Murdoch & Todd Sandler, 2004. "Civil Wars and Economic Growth: Spatial Dispersion," American Journal of Political Science, John Wiley & Sons, vol. 48(1), pages 138-151, January.
    17. Ron P Smith, 2014. "The economic costs of military conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 51(2), pages 245-256, March.
    18. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    19. Cullen S Hendrix & Sarah M Glaser, 2011. "Civil Conflict and World Fisheries, 1952-2004," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(4), pages 481-495, July.
    20. Jose G. Montalvo & Marta Reynal-Querol, 2007. "Fighting against Malaria: Prevent Wars while Waiting for the "Miraculous" Vaccine," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 165-177, February.
    21. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    22. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    23. Nils Petter Gleditsch & Peter Wallensteen & Mikael Eriksson & Margareta Sollenberg & Hã…Vard Strand, 2002. "Armed Conflict 1946-2001: A New Dataset," Journal of Peace Research, Peace Research Institute Oslo, vol. 39(5), pages 615-637, September.
    24. Kosuke Imai & Jeremy M. Weinstein, 2000. "Measuring the Economic Impact of Civil War," CID Working Papers 51, Center for International Development at Harvard University.
    25. Tilman Brück & Michele Di Maio & Sami H Miaari, 2019. "Learning The Hard Way: The Effect of Violent Conflict on Student Academic Achievement," Journal of the European Economic Association, European Economic Association, vol. 17(5), pages 1502-1537.
    26. Bjoern Rother & Gaelle Pierre & Davide Lombardo & Risto Herrala & Priscilla Toffano & Erik Roos & Allan G Auclair & Karina Manasseh, 2016. "The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa," IMF Staff Discussion Notes 16/8, International Monetary Fund.
    27. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    28. Solomon M. Hsiang & Amir S. Jina, 2014. "The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones," NBER Working Papers 20352, National Bureau of Economic Research, Inc.
    29. Paul Collier & V. L. Elliott & Håvard Hegre & Anke Hoeffler & Marta Reynal-Querol & Nicholas Sambanis, 2003. "Breaking the Conflict Trap : Civil War and Development Policy," World Bank Publications, The World Bank, number 13938, July.
    30. Dunne J. Paul & Tian Nan, 2014. "Conflict Spillovers and Growth in Africa," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(4), pages 1-11, December.
    31. Jeremy Weinstein, 2005. "Autonomous Recovery and International Intervention in Comparative Perspective," Working Papers 57, Center for Global Development.
    32. Carlos Bozzoli & Tilman Brück, 2009. "Agriculture, Poverty, and Postwar Reconstruction: Micro-Level Evidence from Northern Mozambique," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(3), pages 377-397, May.
    33. Olaf De Groot, 2010. "The Spillover Effects Of Conflict On Economic Growth In Neighbouring Countries In Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(2), pages 149-164.
    34. Reitschuler, Gerhard & Loening, Josef L., 2005. "Modeling the Defense-Growth Nexus in Guatemala," World Development, Elsevier, vol. 33(3), pages 513-526, March.
    35. Kosuke Imai & Jeremy Weinstein, 2000. "Measuring the Economic Impact of Civil War," CID Working Papers 51A, Center for International Development at Harvard University.
    36. Organski, A.F.K. & Kugler, Jacek, 1977. "The Costs of Major Wars: The Phoenix Factor," American Political Science Review, Cambridge University Press, vol. 71(4), pages 1347-1366, December.
    37. Seung-Whan Choi & Idean Salehyan, 2013. "No Good Deed Goes Unpunished: Refugees, Humanitarian Aid, and Terrorism," Conflict Management and Peace Science, Peace Science Society (International), vol. 30(1), pages 53-75, February.
    38. Miguel, Edward & Roland, Gérard, 2011. "The long-run impact of bombing Vietnam," Journal of Development Economics, Elsevier, vol. 96(1), pages 1-15, September.
    39. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    40. Gatherer, A. & Moller, L. & Hayton, P., 2005. "The World Health Organization European health in prisons project after 10 years: Persistent barriers and achievements," American Journal of Public Health, American Public Health Association, vol. 95(10), pages 1696-1700.
    41. Sabrina DiAddario, 1997. "Estimating the economic costs of conflict: An examination of the two-gap estimation model for the case of Nicaragua," Oxford Development Studies, Taylor & Francis Journals, vol. 25(1), pages 123-141.
    42. Solomon W. Polachek & Daria Sevastianova, 2012. "Does conflict disrupt growth? Evidence of the relationship between political instability and national economic performance," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(3), pages 361-388, March.
    43. Nils B. Weidmann & Doreen Kuse & Kristian Skrede Gleditsch, 2010. "The Geography of the International System: The CShapes Dataset," International Interactions, Taylor & Francis Journals, vol. 36(1), pages 86-106, February.
    44. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    45. Chang, Yang-Ming & Potter, Joel & Sanders, Shane, 2007. "War and peace: Third-party intervention in conflict," European Journal of Political Economy, Elsevier, vol. 23(4), pages 954-974, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bardwell Harrison & Iqbal Mohib, 2021. "The Economic Impact of Terrorism from 2000 to 2018," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(2), pages 227-261, May.
    2. Çağatay Bircan & Tilman Brück & Marc Vothknecht, 2017. "Violent conflict and inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 45(2), pages 125-144, April.
    3. Le, Kien & Nguyen, My, 2020. "Armed conflict and birth weight," Economics & Human Biology, Elsevier, vol. 39(C).
    4. Martin-Shields, Charles P. & Stojetz, Wolfgang, 2019. "Food security and conflict: Empirical challenges and future opportunities for research and policy making on food security and conflict," World Development, Elsevier, vol. 119(C), pages 150-164.
    5. Tilman Brück & Patricia Justino & Charles Patrick Martin-Shields, 2017. "Conflict and development: Recent research advances and future agendas," WIDER Working Paper Series wp-2017-178, World Institute for Development Economic Research (UNU-WIDER).
    6. Olaf J. de Groot, 2012. "Analyzing the costs of military engagement," Economics of Peace and Security Journal, EPS Publishing, vol. 7(2), pages 41-49, July.
    7. Anousheh Alamir & Tillmann Heidelk, 2020. "Natural Disasters and Education," Working Papers ECARES 2020-05, ULB -- Universite Libre de Bruxelles.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blattman, Christopher & Miguel, Edward, 2009. "Civil War," Department of Economics, Working Paper Series qt90n356hs, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    2. Bloom, David E. & Canning, David & Kotschy, Rainer & Prettner, Klaus & Schünemann, Johannes, 2018. "Health and Economic Growth: Reconciling the Micro and Macro Evidence," IZA Discussion Papers 11940, Institute of Labor Economics (IZA).
    3. Olaf J. de Groot & Tilman Brück & Carlos Bozzoli, 2009. "How Many Bucks in a Bang: On the Estimation of the Economic Costs of Conflict," Economics of Security Working Paper Series 21, DIW Berlin, German Institute for Economic Research.
    4. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
    5. Christopher Blattman & Edward Miguel, 2009. "Civil War: A Review of Fifty Years of Research," Working Papers id:2231, eSocialSciences.
    6. Rup Singh, 2015. "Forces of economic growth in China, India, and other Asian countries," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 29(1), pages 62-81, May.
    7. Lim, Jamus Jerome & Adams-Kane, Jonathon, 2008. "Institutions, Education, and Economic Performance," MPRA Paper 11800, University Library of Munich, Germany.
    8. Bloom, David E. & Chen, Simiao & Kuhn, Michael & McGovern, Mark E. & Oxley, Les & Prettner, Klaus, 2020. "The economic burden of chronic diseases: Estimates and projections for China, Japan, and South Korea," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    9. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    10. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    11. Asongu, Simplice A. & Tchamyou, Vanessa S. & Minkoua N., Jules R. & Asongu, Ndemaze & Tchamyou, Nina P., 2018. "Fighting terrorism in Africa: Benchmarking policy harmonization," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 1931-1957.
    12. Maciej Stefański, 2020. "To What Extent does Convergence Explain the Slowdown in Potential Growth of the CEE Countries Following the Global Financial Crisis?," Working Papers 2020-058, Warsaw School of Economics, Collegium of Economic Analysis.
    13. Baharumshah, Ahmad Zubaidi & Slesman, Ly & Wohar, Mark E., 2016. "Inflation, inflation uncertainty, and economic growth in emerging and developing countries: Panel data evidence," Economic Systems, Elsevier, vol. 40(4), pages 638-657.
    14. Simplice Asongu & Nicholas Biekpe & Vanessa Tchamyou, 2019. "Remittances, ICT and doing business in Sub-Saharan Africa," Journal of Economic Studies, Emerald Group Publishing, vol. 46(1), pages 35-54, January.
    15. Simplice A. Asongu, 2017. "Knowledge Economy Gaps, Policy Syndromes, and Catch-Up Strategies: Fresh South Korean Lessons to Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 211-253, March.
    16. Arias, María Alejandra & Ibáñez, Ana María & Zambrano, Andrés, 2019. "Agricultural production amid conflict: Separating the effects of conflict into shocks and uncertainty," World Development, Elsevier, vol. 119(C), pages 165-184.
    17. Simplice Asongu & Christelle Meniago, 2018. "Technology and persistence in global software piracy," Netnomics, Springer, vol. 19(1), pages 43-63, October.
    18. John Ssozi & Simplice A. Asongu, 2016. "The Comparative Economics of Catch-up in Output per Worker, Total Factor Productivity and Technological Gain in Sub-Saharan Africa," African Development Review, African Development Bank, vol. 28(2), pages 215-228, June.
    19. Galimberti, Jaqueson K., 2009. "Conditioned Export-Led Growth Hypothesis: A Panel Threshold Regressions Approach," MPRA Paper 13417, University Library of Munich, Germany.
    20. Teixeira, Aurora A.C. & Queirós, Anabela S.S., 2016. "Economic growth, human capital and structural change: A dynamic panel data analysis," Research Policy, Elsevier, vol. 45(8), pages 1636-1648.

    More about this item

    Keywords

    internal armed conflict; international war; conflict spillover; costs of conflict;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eca:wpaper:2013/278946. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/arulbbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Benoit Pauwels (email available below). General contact details of provider: https://edirc.repec.org/data/arulbbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.