Economics of Armed Conflicts and Governance: An Empirical Study Focusing on South Asia

Hidayat Ullah Khan, Leena Rehman, Alam Khan and Hameed Khan ()
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Hidayat Ullah Khan: Department of Economics, National University of Modern Languages (NUML), Islamabad
Leena Rehman: Department of Economics, Kohat University of Science & Technology, Pakistan
Alam Khan: Department of Economics, Kohat University of Science & Technology, Pakistan
Hameed Khan: Department of Economics, Kohat University of Science & Technology, Pakistan, Postal: Department of Economics, Kohat University of Science & Technology, Kohat, 26000, Pakistan.

Asian Journal of Applied Economics/ Applied Economics Journal, 2021, vol. 28, issue 2, 82-106

Abstract: This study examines the effects of governance on armed conflict and the associations between economic factors, external finances (remittances), natural calamities, and armed conflicts. Panel data are used covering the South Asia region from 2002 to 2018, applying the logit and ARDL models. Based on the logit analysis, the results show that government effectiveness, political stability and absence of violence/terrorism, and regulatory quality, the rule of law, and droughts/floods have a negative relationship with armed conflict. On the other hand, population, remittances, and voice and accountability have positive association with armed conflict. Based on ARDL estimations, government effectiveness, a proxy variable for governance, political stability and absence of violence/terrorism, and the rule of law have negative and highly significant association with armed conflict. It is implied that good governance can reduce the likelihood of armed conflict, while population and remittances can fuel armed conflict. Moreover, natural calamities have an inverse relationship with armed conflict. Surprisingly, conflicts help increase the voice of and demand for accountability by general public in the conflict zone.

Keywords: armed conflict; governance; political stability; ARDL; South Asia (search for similar items in EconPapers)
JEL-codes: C30 F50 F60 (search for similar items in EconPapers)
Date: 2021
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