How do geopolitical risks and local instability shape Lebanese well-being?

This paper examines the impact of geopolitical risk on multidimensional well-being, using Lebanon as a long-run case study to derive insights relevant for other fragile and conflict-affected economies. Using annual data from 1964 to 2024, we construct a composite well-being index tailored to the Lebanese context and develop a localized geopolitical tension measure capturing internal, regional, and global dynamics through principal component analysis. The empirical analysis relies on OLS estimations, quantile regressions, and sub-period analysis. The results indicate that rising geopolitical risk significantly reduces well-being, with stronger effects during periods of heightened instability and among more vulnerable groups. Moreover, the interaction between domestic and global tensions amplifies these adverse impacts. By treating Lebanon as an illustrative case, the findings highlight broader mechanisms through which geopolitical risk shapes well-being, underscoring the importance of integrated and resilience-oriented policy responses in uncertain environments.