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Effects Of Internal Armed Conflict

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The theoretical impacts of internal armed conflict over economic growth are linked to the general theories about economic growth in the long run. In the neoclassical growth model augmented for human capital e.g. Mankiw et al. (1992), the impact of internal armed conflict depends greatly on its effects over the stock of factors of production; as well as the perception that agents in the economy have about the effects of conflict.
Under the neoclassical Solow growth framework, it is expected that any effect of internal armed conflict on the economy will be temporal, i.e. only perceivable in the short run. Therefore, once conflict has ceased the stocks of factors of production should return to the long run steady state levels and therefore having …show more content…

The effect of internal armed conflict is in general negative and statistically significant for medium term growth (5-10 years); ranging between a reduction in growth rates of 1 percentage point and 3.5 percentage points, according to the different studies. Furthermore, Gardeazabal (2012), who reviews the measuring of conflict costs, concludes that the effects are of a considerable magnitude and in general statistically significant, even though the channels and precise estimates vary considerably. However, cross-section analyses of robust regressors of economic growth do not identify war or related variables as strong predictors of long-term income growth (Ciccone & Jarocinski, 2010; Sala-i-Martin et al., 2004). These results could be explained by the lack of accounting for endogeneity in the variables or for the omitted variable bias inherent in the data for conflict-affected economies (Gardeazabal, …show more content…

The most cited results in this field are the association between low levels of income and incidence of conflict, as well as a relation between income growth shocks and the onset of internal armed conflicts. Although, in the latter case the actual sign and channel of the effect remains open to debate. Blattman & Miguel (2010) argue that the effect of income shocks over conflict onset or incidence are difficult to identify and interpret, due to the reverse causality issues. Additionally, the apparent connection between conflict and income or income growth could be jointly determined by a third factor like

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