Crisis Prevention and Recovery

Several studies have attempted to assess the total economic costs of conflict by comparing actual growth with what is likely to have happened in the absence of conflict. Findings reveal that conflicts generally have a high negative impact on economic performance.  In addition, the ‘growth impact’ of conflict differs substantially country to country, depending on the proportion of the population actually fighting or being threatened, the duration and geographical spread of the conflict, the extent to which the central government has collapsed, how the war is fought (the use of mines has a very large and widespread negative impact in an agrarian-based economies) and the international reactions to the conflict―in terms of financial flows, trade policies and embargoes, which may have a particularly negative impact on oil-exporting countries that import most food items. In particular, the relation between the duration and overall impact of conflict is a complex one. While longer conflicts appear to be associated with more resilient average annual growth, duration may play a slightly greater role in driving the overall change in GDP per capita during conflict as longer conflicts tend to take a slightly greater toll on GDP per capita than shorter conflicts.  Long lasting conflicts that spread throughout a country’s territory (such as  in Cambodia and Mozambique) inflict immense economic damage.