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Economic consequences of war: Evidence from Sri Lanka

K. Renuka Ganegodage and Alicia Rambaldi ()

Journal of Asian Economics, 2014, vol. 30, issue C, 42-53

Abstract: We propose a theoretical and econometric framework to evaluate the impact of war on economic growth of a developing country with an open economy. The theoretical framework encompasses both the neoclassical and endogenous growth models. We test this framework using Sri Lankan data. The war had significant and negative effects both in the short and long-run (annual average of 9% of GDP). High returns from investment in physical capital did not translate in sizable positive externalities. Only short-run significant effects of openness on growth are found. Inconsistent politically driven policies towards openness are the likely reason.

Keywords: Conflict; Growth; Returns to investment (search for similar items in EconPapers)
JEL-codes: O53 O47 C32 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Economic Consequences of War: Evidence from Sri Lanka (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:30:y:2014:i:c:p:42-53

DOI: 10.1016/j.asieco.2013.12.001

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