A SURVEY OF THE GLOBAL ECONOMIC COSTS OF CONFLICT

Abstract

This paper defines the global economic costs of conflict and suggests two key criteria, namely comprehensiveness and consistency, which are necessary for a valid calculation of such costs. A critical review of the literature reveals that most studies focus on national income losses, using counterfactual regression models, finding a negative impact on growth both for conflict countries themselves and for their neighbors. However, the debate is quite fragmented and the literature fails to combine these insights in a comprehensive and consistent manner. Furthermore, there is little work thus far on integrating aggregate and micro‐level estimates of the costs of conflict.

Keywords:

• War
• Conflict
• Costs
• Growth
• Methodology
• Survey

JEL Codes:

• D74
• F51
• H56

ACKNOWLEDGEMENTS

The useful comments and insightful suggestions by Olaf J. de Groot and an anonymous referee are gratefully acknowledged. We also wish to thank Thorsten Drautzburg for his valuable research assistance.