Economics at your fingertips  

Your war, my problem: How conflict in a neighbour country hurts domestic development

Fabrizio Carmignani and Parvinder Kler ()

Economic Modelling, 2018, vol. 70, issue C, 484-495

Abstract: This paper explores the transmission mechanisms of the impact of civil conflict in the neighbourhood on the economic development of the domestic country. We study a set of endogenous relations linking growth and its fundamental causes, domestic conflict and conflict in the neighbourhood. Methodologically, we go beyond a reduced-form single equation model to estimate a system of four equations where neighbourhood conflict affects domestic civil conflict, institutions and economic integration. Civil conflict in the neighbourhood significantly increases the probability of domestic conflict, lowers the quality of domestic institutions, and reduces the degree of economic integration with the rest of the world. The dollar value of this damage cumulates over time depending on the frequency/duration of spatial conflict. Our simulations show that the cost to the domestic economy ranges between $506 and $14,165 in lost per-capita GDP over a period of fifteen years.

Keywords: Civil conflict; War in the neighborhood; Economic development; Cost of conflict (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.econmod.2017.08.030

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-08-28
Handle: RePEc:eee:ecmode:v:70:y:2018:i:c:p:484-495