The Elusive Peace Dividend of Development Policy: From War Traps to Macro Complementarities

Abstract

This article reviews the literature on civil conflict and development with a focus on the socioeconomic consequences of violence and on promising policies for fostering peace. We make four main points. First, one of the reasons conflict is still often overlooked as key factor for development is that conflict costs are typically underestimated, in particular the shadow costs of deterrence. Second, there are several types of war traps that hold countries back, both economically and politically. Third, to break these traps, policies must be calibrated to address jointly both poverty and social tensions, as there is a strong macro complementarity between peace and development objectives. We document how single-minded policies that ignore this dual challenge can spectacularly fail, and we discuss in depth a series of particularly promising policies. Fourth, we highlight the increasing potential of novel data collection methodologies and the need for policy evaluation tools in violent contexts. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Shutdown policies and conflict worldwide

“…Finally, Covid-19 restrictions may trigger shifts in the balance of power, which has an ambiguous effect on conflict. In workhorse contest models, a more balanced power implies more conflict (Rohner and Thoenig, 2020). Starting from low levels of conflict due to a large potential cost of rebellion (Esteban and Ray, 2008), a small shift in the balance of power due to the restriction policies (such as due a negative shock to the state capacity) can result in a significant escalation of conflict.…”

Modelling behaviour in intergroup conflicts: a review of microeconomic approaches

“…domain references general [9][10][11][12] group-based social preferences [13][14][15][16][17] identity choice [18][19][20][21][22] contest models [23][24][25][26][27][28][29] other modelling approaches [30][31][32][33][34] royalsocietypublishing.org/journal/rstb Phil. Trans.…”

“…Just like the phenomena studied, the resulting models are diverse, of course, and thus have less structural overlap with each other than contest models do. For overviews of ( parts of ) this literature, see references [31][32][33]75].…”

Medication Against Conflict

“…This way, our work complements research on the effects of policy for social violence, which has considered foreign aid (de Ree and Nillesen, 2009; Savun and Tirone, 2012; Nunn and Qian, 2014), cash transfers (Crost et al, 2014), infrastructure investments (Berman et al, 2011), reconciliation (Ciliers et al, 2016), and employment policies (Blattman and Annan, 2016; Fetzer, 2020), but which has neglected the role of health interventions. In fact, the results of the existing literature suggest that the effects of policy interventions to prevent or reduce social violence were generally mixed, and policies that resulted in the disbursement of appropriable cash were generally much less successful than policies that led to a higher opportunity cost of fighting (see, e.g., Rohner and Thoenig, 2020, for a survey). This is exactly what health interventions accomplish, so our evidence contributes an important missing piece of evidence regarding the scope of policy interventions against conflict.…”