Post-Conflict Recovery: Institutions, Aid, or Luck?

34 Pages Posted: 16 Jul 2011

See all articles by Marshall Mills

Marshall Mills

International Monetary Fund (IMF)

Antonio C. David

World Bank - Policy Research Department; International Monetary Fund (IMF)

Fabiano Rodrigues Bastos

affiliation not provided to SSRN

Date Written: June 2011

Abstract

This paper identifies the factors linked to cross-country differentials in growth performance in the aftermath of social conflict for 30 sub-Saharan African countries using panel data techniques. Our results show that changes in the terms of trade are the most important correlate of economic performance in post-conflict environments. This variable is typically associated with an increase in the marginal probability of positive economic performance by about 30 percent. Institutional quality emerges as the second most important factor. Foreign aid is shown to have very limited ability to explain differentials in growth performance, and other policy variables such as trade openness are not found to have a statistically significant effect. The results suggest that exogenous factors ("luck") are an important factor in post-conflict recovery. They also highlight the importance in post-conflict settings of policies to mitigate the macroeconomic impact of terms of trade volatility (including countercyclical macroeconomic policies and innovative financing instruments) and of policies to promote export diversification.

Keywords: Cross country analysis, Development assistance, Economic growth, Economic models, Economic recovery, Governance, Political economy, Sub-Saharan Africa, Terms of trade, Trade liberalization

Suggested Citation

Mills, Marshall and David, Antonio C. and Rodrigues Bastos, Fabiano, Post-Conflict Recovery: Institutions, Aid, or Luck? (June 2011). Available at SSRN: https://ssrn.com/abstract=1886900 or http://dx.doi.org/10.2139/ssrn.1886900

Marshall Mills (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Antonio C. David

World Bank - Policy Research Department ( email )

1818 H Street
Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Fabiano Rodrigues Bastos

affiliation not provided to SSRN

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