The Economic Costs of Conflict: A Production Network Approach

Mathieu Couttenier, Nathalie Monnet and Lavinia Piemontese
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Lavinia Piemontese: Bocconi University [Milan, Italy]

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Abstract: We develop a novel approach for estimating the economic costs of conflict, using the production network as the primary mechanism through which the disruptive effects of localized conflict spread to peaceful areas. Applying this approach to the Maoist insurgency in Eastern India from 2000 to 2009, we quantify the overall impact of conflict, taking network propagation into account. Our key finding reveals that a one percentage point increase in conflict-induced distortion is associated with an average annual decrease of 0.236% in aggregate output. Notably, 73% of the total output loss can be attributed to network propagation.

Keywords: Conflict; Firms; Production Network; Aggregate Output Loss Conflict (search for similar items in EconPapers)
Date: 2024
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Working Paper: The Economic Costs of Conflict: A Production Network Approach (2022)
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