What are the economic legacies of armed conflict? How should policymakers approach these legacies in recovery strategies? This book chapter from the United Nations Development Programme argues that post-conflict countries are not blank slates on which new economic and social systems can be built. For a recovery strategy to work, it must acknowledge the legacies of armed conflict and consolidate those that contribute towards peace and stability.
The greatest challenge for post-conflict recovery is restoring economic foundations in ways that lessen the risk of war recurring. Analyses of what makes conflict recurrence more likely are helpful to policymakers because they indicate the requirements for post-conflict economic recovery.
The legacies of violent conflict include the widespread destruction of physical capital and infrastructure, reduced human capital, disease, displacement, capital flight, lost livelihoods, weakened institutions, reduced state capacity and diminished social capital. As a result, the country’s rate of economic growth usually declines. However, conflict often also transforms economies. The effects of conflict on economic performance include:
- Decline in output: A recent Oxfam report estimated the loss of GDP growth suffered by African countries as a result of conflict at $18 billion annually. The pace and depth of economic contraction during post-1990 conflicts has tended to be greater than that during pre-1990 conflicts.
- Structural changes in the economy: Frequently, much of the formal sector is destroyed and replaced by informal economic activities. These informal activities complicate economic recovery after war in several ways. Very often those who profit from these shadow economies are also the victors in the war.
- Lost employment and livelihoods: Employment is negatively affected by factors such as disrupted markets and lower levels of public expenditure. Young men who are returning from war and are unable to find productive employment may end up participating in illicit activities or taking up arms again.
Post-conflict recovery strategies need to be tailored to the specific circumstances of individual countries. An economic recovery programme needs to reconstruct physical facilities and rebuild institutions as well as laying the foundations for economic growth. It also needs to address factors likely to increase the risk of conflict recurrence. There are four major objectives for post-conflict recovery:
- Providing the conditions to generate economic recovery and growth. Economic growth in post-conflict countries reduces the risk of renewed armed conflict.
- Generating employment and other economic opportunities, especially for youth. Severe unemployment or underemployment seems to increase the risk of conflict recurrence.
- Tackling horizontal inequalities, if severe. Inequalities between culturally-defined groups have become increasingly recognised as major causes of violent conflicts.
- Managing natural resources and distributing the revenues in a transparent and equitable way. Lucrative natural resources affect the incidence, and sometimes also the duration, of conflicts.
