Volume 25, Issue 3

Estimates of the costs of war include the financial costs and the lives that are lost. Using estimates of the value of a statistical life and the value of a statistical injury, the health losses can be converted to a common monetary metric and added to the budgetary costs. Counting the monetary value of the direct war-related fatalities and injuries plays a relatively greater role for the Vietnam War than for the Iraq and Afghanistan conflicts. This article proposes an alternative war cost metric that also recognizes the lives that are also lost because economic resources are diverted to war efforts. All costs are converted to mortality costs using a measure of the mortality opportunity cost to the public of war-related expenditures. Recognition of these indirect mortality effects approximately triples the number of fatalities attributable to the post-9/11 wars. The relative role of these indirect mortality losses is less for the Vietnam War because of that war’s higher rate of fatalities compared to financial costs.

Like the empirical growth literature, the empirical civil war literature has identified few robust determinants. In this paper, I show that the lack of robust estimates is consistent with rational, forward-looking behavior in a simple dynamic conflict model with asymmetric information. The main result is most of the conflict determinants, such as income per capita, inequality, and natural resource revenues, have ambiguous effects on the conflict risk. The ambiguities largely reflect that, when the parameters change, agents re-optimize.

Civil conflict is the nation’s most important historical event, and it became more frequent in countries already emerged from previous conflicts. High economic growth, as well as other institutional procedures, is key to break this conflict trap. Thus, the current article explores the role decentralization may play to enhance economic growth in post-civil conflict countries. In order to avoid untrue peaceful cases, the article adopted a strict criterion of post-conflict periods, leading to a small dataset. Distinguishing between two forms of decentralization and using two equations with different techniques, the article finds a hampering effect of fiscal decentralization on economic growth in countries emerging from civil conflicts, while it finds insignificant mixed effects of political decentralization. These findings support the distinction made between the real de facto decentralization and the official de jure one. They validate the belief that although central authorities in many countries pretend to apply decentralization, they limit its effectiveness by some legal procedures creating “fake” decentralization.

Economic growth theory highlights the importance of saving rates to explain the long-run economic performance of economies. While economic theory has provided an analytical and empirical framework to understand the determinants of saving rates, one of the limitations is that it excludes from the analysis the potential effects of armed conflict and political instability, although it has been demonstrated that such situations can affect intertemporal preferences in terms of consumption and saving. Using a sample of 55 countries with/without conflict from 1980 to 2015, we analyze whether aggregate savings rates are negatively correlated with the existence, intensity, and duration of an armed conflict. The results indicate that countries that have suffered some type of conflict exhibit a saving rate 2.7% lower on average than the rate exhibited by countries that have not suffered such conflict. Additionally, if there is a high-intensity conflict, the saving rates decreases 2.5% more relative to countries that experience low-intensity conflict. Finally, we found a nonlinear relationship between saving rates and conflict duration, suggesting that the impact of conflict on savings decreases with time. These results extend the literature on the effects of armed conflicts on the long-run economic growth.

The Qualified Industrial Zone (QIZ) model of border-located, duty and quota-free industrial regions is a policy tool designed to capitalize on cross-border cooperation to facilitate post-conflict normalization. Using mixed methods, this study presents and evaluates the implementation of the 1996 US initiated Israel-Jordan QIZ agreement and its social, economic and political impact, contributing to broader debates regarding the potential and limitations of post-conflict normalization through trade preference agreements. The Israel-Jordan QIZ framework no longer functions due to multiple circumstances. Yet there are lessons to be gained from the mechanisms of the QIZ implementation which contributed to the only minimal realization of its anticipated potential. We found that economic brokerage fostering trade and industry cross-border cooperation can serve one-sided economic interests while minimizing spillover to political or social realms, contrary to original intentions. The QIZ experience demonstrates the importance of self-motivation of each of the parties regarding specific cooperative ventures in realizing the potential of cross-border cooperation.