A number of studies have attempted to evaluate the costs of conflict, but few have evaluated the impact of conflict on country growth. An even more limited number of studies have attempted to evaluate the spillover effects of conflict, with those that have finding clear negative effects on primary neighbors and then positive secondary neighbor effects. There are, however, a number of issues with these studies and this paper updates and develops their analysis using a dynamic panel approach. It confirms the negative sign and magnitude of the previous findings for the host country and primary neighbors, but finds no evidence of any positive or negative effects of conflict on secondary neighbors.
|Variable||Variable description||Mean||Std. dev|
|gdp(1)||Real GDP per capita||1821||2142|
|invest(1)||Investment as a share of GDP||20.56||13.51|
|school(2)(3)||Percentage of secondary education attained in the population older than 25||11.90||12.62|
|pop(1)||Population in 000’s||11,663||17,810|
|conflict(4)||Conflict indicator (1=Conflict, 0=No conflict)||0.19||0.39|
|intense(4)||Intense Conflict indicator (1=Conflict, 0=No conflict)||0.06||0.24|
|civil(4)||Civil war indicator (1=Civil war, 0=No civil war)||0.13||0.34|
|Δgdp||Growth rate of real per capital GDP (log)||0.009||0.108|
|Δinvest||Growth rate of investment as share of GDP (log)||0.012||0.249|
|Δschool||Growth rate of education attainment (log)||0.010||0.007|
|n+g+δ||Population growth rate (clpop)+0.05 (assumed value for g+d) used in Solow-style regressions||0.075||0.065|
Note: (1) Penn World Table 7.1 Center for International Comparisons of Production, Income and Prices (CIC), University of Pennsylvania.
(2) Penn World Table 8.0 Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2013), “The Next Generation of the Penn World Table.” Available for download at www.ggdc.net/pwt.
(3) Barro, Robert and Jong-Wha Lee, “A New Data Set of Educational Attainmentin the World, 1950–2010,” forthcoming, Journal of Development Economics.
(4) UCDP/PRIO Armed Conflict Version 4-2009 and Themner, Lotta and Wallensteen, Peter, “Armed Conflict, 1946–2010.” Journal of Peace Research.
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