Violent Conflicts Increase Income Inequality

Political unrest, civil war, and - in extreme instances - genocide have contributed to the disappointing economic growth observed in many developing countries in recent decades, particularly in Africa. Sustained periods of violence also influence the distribution of income within a society; a cross-country analysis shows that income inequality increases as a result of violent conflicts, especially in the early post-war period. Immediate post-war efforts to address the social and economic disruption caused by conflict may help to counteract this trend.Inequality, Conflict, War

Combating "Maritime Terrorism" off the Coast of Somalia

This paper evaluates the effectiveness of the international naval mission in the Gulf of Aden from 2008-2010, both in terms of its counter-piracy and its counter-terrorism objectives. We draw on arguments developed in the literature of law and economics, detailed statistical analyses and a large number of in depth interviews. Counter-piracy operations are a qualified success: their main effects are the stabilisation of attacks at a high level and the substitution between the relatively well protected transit corridor in the Gulf of Aden and the open sea. However, the counter-piracy measures appear to deter pirates from forming alliances with Islamist movements and may therefore make a major contribution to international security.Piracy, Somalia, counter-terrorism, law and economics, deterrence, naval intervention

Beyond the Overall Economic Downturn: Evidence on Sector-Specific Effects of Violent Conflict from Indonesia

This paper analyses the impact of violent conflict on economic growth using micro-level data from Indonesia. We compile a panel dataset at district level for the period 2002-2008, and disentangle the overall negative economic effect of violent conflict into its sectoral components. Our results reveal substantial differences across sectors, with the most detrimental impact evident in manufacturing industries and the service sectors. Further, the short-run impacts on growth appear to be only temporal, and some evidence for the 'phoenix effect' in the early post-conflict period is found. The construction sector, in particular, recovers soon once conflict ends, while manufacturing industries and the finance sector appear especially reliant on a lasting peace. A series of alternative specifications confirm the main findings of the analysis.Violent conflict, economic growth, Indonesia

Combating "Maritime Terrorism" off the Coast of Somalia

This paper evaluates the effectiveness of the international naval mission in the Gulf of Aden from 2008-2010, both in terms of its counter-piracy and its counter-terrorism objectives. We draw on arguments developed in the literature on terrorism and law and economics, detailed statistical analysis and a large number of in depth interviews. Counter-piracy operations are a qualified success - their main effects are the stabilisation of attacks at a high level and the substitution between the relatively well protected transit corridor in the Gulf of Aden and the open sea. However, the counter-piracy measures appear to deter pirates from forming alliances with Islamist movements and may therefore make a major contribution to international security.

Group Violence, Ethnic Diversity, and Citizen Participation: Evidence from Indonesia

This paper addresses the impact of violent conflict on social capital, as measured by citizen participation in community groups defined for four activity types: governance, social service, infrastructure development and risk-sharing. Combining household panel data from Indonesia with conflict event information, we find an overall decrease in citizen contributions in districts affected by group violence in the early post-Suharto transition period. However, participation in communities with a high degree of ethnic polarization is less strongly affected and even stimulated for local governance and risk-sharing activities. Moreover, individual engagement appears to be dependent on the involvement of other members from the own ethnic group, which points to emphases on bonding social networks in the presence of violence. Finally, in conflict regions, the wealthier households are more likely to engage into cooperative and infrastructure improvement activities, while they are dropping from security groups. On the contrary, the poorest households get more involved in social service activities and less in infrastructure groups. Our results illustrate the danger of generalizations when dealing with violence impact on community activities. We found a large variety of responses depending on the considered activity and its expected economic or social function. We also found large observed and unobserved individual heterogeneities of the effect of violent conflict on activity participation. Once an appropriate nomenclature of activities is used and intensive controls for observed and unobserved heterogeneity are performed, we found that some activities can actually be stimulated by conflict situations. In this respect, the ethnic configuration of society seems to be central in understanding this type of social capital building.

Violent Conflict and Inequality

This paper analyzes the distributive impacts of violent conflicts, which is in contrast to previous literature that has focused on the other direction. We use cross-country panel data for the time period 1960-2005 to estimate war-related changes in income inequality. Our results indicate rising levels of inequality during war and especially in the early period of post-war reconstruction. However, we find that this rise in income inequality is not permanent. While inequality peaks around five years after the end of a conflict, it declines again to pre-war levels within the end of the first post-war period. Lagged effects of conflict and only subsequent adjustments of redistributive policies in the period of post-war reconstruction seem to be valid explanations for these patterns of inequality. A series of alternative specifications confirms the main findings of the analysis.conflict, war, inequality, reconstruction, income distribution

Violent Conflict and Inequality

This paper analyzes the distributive impacts of violent conflicts, which is in contrast to previous literature that has focused on the other direction. We use cross-country panel data for the time period 1960-2005 to estimate war-related changes in income inequality. Our results indicate rising levels of inequality during war and especially in the early period of post-war reconstruction. However, we find that this rise in income inequality is not permanent. While inequality peaks around five years after the end of a conflict, it declines again to pre-war levels within the end of the first post-war period. Lagged effects of conflict and only subsequent adjustments of redistributive policies in the period of post-war reconstruction seem to be valid explanations for these patterns of inequality. A series of alternative specifications confirms the main findings of the analysis.Conflict, Inequality, Reconstruction, Income Distribution

Gewalttätige Konflikte erhöhen Einkommensungleichheit

Politische Unruhen, Bürgerkriege und im Extrem Völkermord sind einige der Gründe für die enttäuschende Wirtschaftsentwicklung in vielen Entwicklungsländern in den letzten Jahrzehnten, vor allem in Afrika. Perioden andauernder Gewalt beeinflussen auch die Verteilung von Einkommen in den betroffenen Gesellschaften. Eine Ländervergleichsstudie zeigt steigende Ungleichheit im Verlauf von gewalttätigen Konflikten, vor allem in den ersten Jahren nach Kriegsende. Die möglichst rasche Aufarbeitung der kriegsbedingten Verwerfungen im wirtschaftlichen und sozialen Leben scheinen diesem Trend entgegenwirken zu können.Inequality, Conflict, War

What Can Be Done to Reduce the Occurrence of Piracy in the Short and Long Run?

The problem of piracy and other forms of maritime security is actually less severe than many people perceive. Nevertheless, it is a problem that needs to be addressed. To solve the problems around Somalia, the naval involvement should continue, and effective punishment for piracy must be increased. Finally, in order to fight the long-term occurrence of piracy, a land-based solution must be found. Such a solution can only work when the focus is on building institutions and particularly the fight against corruption. There are other regions in the world that may succumb to piracy and where such land-based reforms can prevent piracy from being established in the first place.

Beyond the Overall Economic Downturn: Evidence on Sector-specific Effects of Violent Conflict From Indonesia

This paper analyzes the impact of violent conflict on economic activity using micro level data sources from Indonesia. the study compiled a panel dataset at the kabupaten level for the period 2002-2008, and attempted to disentangle the overall negative effect of violent conflict on economic growth into its sectoral components. we find substantial differences across sectors, with the most detrimental impact evident in manufacturing industries and the service sector. furthermore, the short-run impacts on growth appear to be only temporal and some evidence of the "phoenix effect" in the ready post-conflict period is found. the construction sector, in particular, recovers quickly once the conflict ends, while manufacturing industries and the finance sector appear especially reliant on a lasting peace. the results therefore reveal the substantial effects of violent conflict on the structure of the economy and hence its longer-term growth trajectory. a series of alternative specifications confirm the main findings of the analysis. keywords: violent conflict, economic growth, Indonesia jel codes: 011, f5