22-10-2023 (SINGAPORE) A recent study published in the Journal for Peace Research by the International Security and Development Center (ISDC) reveals the significant economic costs of war and emphasizes the importance of preventing conflicts. Led by Professor Tilman Brück, the researchers highlight the global disparities in the distribution of the burden of conflict, with developing countries suffering the most while high-income countries benefit from their involvement in external conflicts.
The study examines data from 1970 to 2014 and analyzes the economic impact of different types of conflicts, including civil, interstate, and non-territorial wars. Using a conflict intensity scale, the researchers measure the differential impact on yearly GDP growth. The findings demonstrate that violent conflicts have a detrimental effect on economic output as they disrupt production, divert resources towards military spending, and hinder productive public expenditures.
According to the study, the world would have been 12% wealthier in 2014 if violent conflicts had been absent since 1970. The costs of war are unequally distributed, with Asia projected to benefit the most from the absence of conflict during that period. On the other hand, North America would have incurred losses of USD 0.9 trillion. The study also highlights that countries engaged in wars abroad benefit economically from domestic military spending while causing damage to foreign territories.
Furthermore, the study reveals that countries neighboring conflict zones experience increased insecurity and reduced trade due to spillover effects. Even after a conflict ends, civil conflicts continue to significantly impact growth for up to four years. Although there is some evidence of a post-conflict “peace dividend,” the net accumulated GDP gap remains negative for most affected economies, particularly those emerging from civil conflicts.
The researchers emphasize the importance of preventive measures and post-conflict reconstruction to mitigate the economic costs of war. They suggest that public policy should focus on preventing conflicts in the first place and, if conflicts do occur, accelerating the reconstruction process to aid affected countries in recovering lost output.
Professor Tilman Brück, the lead author of the study, highlights the need to strengthen institutions for peace to achieve prosperity and sustainability. He states, “Our analysis shows that the economic benefits of peace are taken for granted all too often. We need to prevent war as it is good economics, and rebuilding post-war economies is also a good investment.”
