Does Conflict Disrupt Growth? Evidence of the Relationship between Political Instability and National Economic Performance

51 Pages Posted: 22 Feb 2010

See all articles by Solomon W. Polachek

Solomon W. Polachek

State University of New York at Binghamton; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Daria Sevastianova

affiliation not provided to SSRN

Abstract

Current empirical growth models limit the determinants of country growth to geographic, economic, and institutional variables. This study draws on conflict variables from the Correlates of War (COW) project to ask a critical question: How do different types of conflict affect country growth rates? It finds that wars slow the economy. Estimates indicate that civil war reduces annual growth by .01 to .13 percentage points, and high-intensity interstate conflict reduces annual growth by .18 to 2.77 percentage points. On the other hand, low-intensity conflict slows growth much less than high-intensity conflict, and may slightly increase it. The detrimental effect of conflict on growth is intensified when examining non-democracies, low income countries, and countries in Africa.

Keywords: war, economic growth, conflict

JEL Classification: C2, O1, O47, O57, P47, P52

Suggested Citation

Polachek, Solomon W. and Sevastianova, Daria, Does Conflict Disrupt Growth? Evidence of the Relationship between Political Instability and National Economic Performance. IZA Discussion Paper No. 4762, Available at SSRN: https://ssrn.com/abstract=1556550

Solomon W. Polachek (Contact Author)

State University of New York at Binghamton ( email )

Binghamton, NY 13902-6000
United States
607-777-2144 (Phone)
607-777-4900 (Fax)

National Bureau of Economic Research (NBER) ( email )

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IZA Institute of Labor Economics ( email )

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Daria Sevastianova

affiliation not provided to SSRN

No Address Available

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