The Economic Legacy of Warfare: Evidence from European Regions
46 Pages Posted: 12 Jul 2015 Last revised: 14 Sep 2017
Date Written: September 12, 2017
This paper shows new evidence that, counterintuitively, the economic legacy of warfare can be positive. We use geocoded data on historical conflict locations in Europe to construct estimates of local exposure to past warfare. We document a positive and significant relationship between historical conflict exposure and regional economic development levels today. This result is robust to controls for initial demography, local geographical features, and country fixed effects. To further account for the possibility of omitted variable bias, we perform an instrumental variables analysis. We find that agglomeration effects, technological innovation, and urban manufacturing were channels through which historical warfare translated into long-run regional development.
Keywords: historical warfare, legacy of warfare, economic development, sub-national level, Europe
JEL Classification: O10, N40, N90, P48, R11
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