Re-evaluating the economic costs of conflicts

Mariana Lopes da Fonseca and Thushyanthan Baskaran

No 246, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: This paper studies the economic costs of conflicts at the country and ethnic group settlement level with light output data as measured by orbital satellites and conflict data spatially mapped to latitude and longitude coordinates. Using a worldwide dataset of 7,704 individual ethnic group settlements of 862 ethnic groups in 177 countries, we find that conflicts strongly reduce light output in settlements directly affected by fighting over the period 1992-2008. In addition, conflicts have large negative spillovers both across and within countries: light output in settlements not directly exposed to fighting declines significantly once a conflict begins; neighboring countries also experience large negative effects. The negative effects of conflicts are particularly pronounced in Eastern Europe, but also observable in sub-Saharan Africa, Latin America, and South and South-East Asia. In contrast, conflicts have, on average, no negative effects on light output in the Middle East and in the West. We contrast these results with cross-country regressions with GDP data, which suggest much smaller negative effects of conflicts.

Keywords: violent conflicts; economic conditions; light output (search for similar items in EconPapers)
JEL-codes: O10 O40 R10 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:246

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