As an economist who works on civil wars, I am in a small minority in two senses: very few economists work on civil wars and most of the people who do work on civil wars are not economists. I do not want to imply that economics has more to offer than other disciplines. But to date, the contribution of economics has scarcely even been heard, and it deserves more attention.

Based on a sample of some 160 countries and 78 civil wars between 1960 and 1999, the research project at the World Bank which I lead seeks to develop a statistical model which will explain whether a country had a civil war or not within a 5-year period, and what factors were most significant in causing or restraining the outbreak of violence. The statistical approach thus seeks to predict for each country in the world what it’s risk of civil war was in any 5 year period, considering several explanatory variables. 

The Economic Causes of Civil Wars

Our statistical analysis indicates that 3 economic characteristics of a country are significant and quite powerful explanations for the likelihood of civil wars: these include the level, growth and structure of income.

First, conflict is overwhelmingly a phenomenon of low income countries. Obviously, conflict reduces income, but our research controls for this by examining income before the conflict at the beginning of a 5-year-period and predicts the risk of civil war during the subsequent period. 

Second, and more controversially, our research indicates that the faster the rate of growth in a country, the lower the risk of conflict. This result runs counter to the common presumption that rapid economic change in a country causes conflict. In fact, rapid economic growth reduces conflict. To provide some order of magnitude, the average developing country faces about an 11 percent risk of having civil war in any 5 year period. Each time a percentage point is added to the rate of growth, this reduces the risk of civil war by a percentage point, which is a significant impact.

Third, dependance on primary commodities substantially increases the risk of conflict, unless the primary commodity is extremely plentiful, such as in the case of oil in Saudi Arabia. The difference in the risks is absolutely enormous. In a country with no primary commodity exports at all, the risk is about one percent in a 5-year period. In a country with high dependence on primary commodities, which means about 30 percent of its national income comes from primary commodities, the risk is around 23 percent. 

The particular primary commodities which a country is dependent on does not matter as much as one might think. The big difference is between oil and non-oil, but the impact is not that marked. The dependence on oil continues to increase the likelihood of civil war for longer; in fact, if a country has 40 percent or 50 percent in oil income, the likelihood of civil war is quite high.  

Besides these economic factors, two aspects of a country’s social composition are also closely correlated with the likelihood of civil war. One is something I call “ethnic dominance.” By dominance, I mean the largest ethnic group in the country is more or less a majority but not overwhelming. Our research suggests that when the largest ethnic group is between 45 and 90 percent of the population, this constitutes conditions of ethnic dominance. If the country is characterized by ethnic dominance, the risk of conflict approximately doubles. This might first appear to be a large effect, but it is small when compared with the economic effect. 

We have also investigated both ethnic diversity and religious diversity and the combination which we call social fractionalization. Controlling for ethnic dominance, the more the society is fractionalized into different ethnic and religious groups, the safer it is.

A final causal factor of significance is whether a neighboring country is at war. Each war spills over into neighboring countries to the degree of about 30 percent. 

Factors which do not Cause Civil Wars

Some very surprising things are not correlated with the likelihood of civil war. One is military expenditure. We cannot find any deterrence effect to military expenditure before a conflict. Of course, it is quite complicated to examine the effect of military expenditures, because governments may see a big risk of conflict and increase military spending in anticipation of the conflict. In such a case, the increase in spending might appear to be causing the conflict, when it in fact may be a result of an impending conflict. Our research has controlled for that and we still cannot find any deterrent effect for military expenditures.

I also cannot find any effect from economic inequality on the risk of conflict. I have looked at both income inequality and land inequality, and neither are correlated with an increased risk of civil conflict. In particular countries, there might be a correlation, but globally, we find no relationship.

The other factor which does not appear to be correlated with conflict risk is political rights. Democracy, dictatorship, and political repression seem to have no effect on the risk of conflict. This often disappoints those who promote democratization as a means for avoiding violent conflict, but the statistical evidence does not support a strong correlation.

The Case of Africa

To illustrate the statistical model I have outlined, I would like to apply it to Africa over the last 30 years. Africa has a lower level of income than other regions, drastically lower growth than other regions and a chronically worse structure of income. Africa alone of the continents has not diversified out of primary commodity dependence. Africa is more dependent on primary commodities now than it was 30 years ago. 

Africa has had a very unfortunate deteriorating trend. Thirty years ago, it was safer than other regions. Now, it is more dangerous than other regions in terms of the risk of violent conflict, and that is fully accounted for by the economic deterioration in Africa. 

On the other hand, there are relatively few societies in Africa that are characterized by ethnic dominance. While there are exceptions, Africa on the whole is just too fractionalized for even the biggest groups to be over 45 percent. So, Africa is characterized by a very high degree of ethnic and religious fractionalization, which reduces the risk of conflict.

So, on our analysis which is, I realize, deeply against the grain of most thinking, Africa’s high incidence of civil war is not due to its social structure. Its social structure is a factor making it relatively safe. Its problems are economic, and hence contingent.

Policy Implications

Several policy implications follow from this understanding of civil conflict. First, if we actually want to try to prevent conflict, we might get more mileage out of reducing economic viability than on addressing objective grievances. To avoid any misunderstanding, I think that there are very good reasons in all societies for addressing issues of inequality and political rights.  Unfortunately, I think that it is a false bill of goods to believe that they are going to deliver peace in conflicted societies. Our agenda for conflict reduction has to be substantially focused on reducing economic viability. 

Furthermore, it is clear that some of the variables that matter most in reducing the likelihood of conflict are economic variables – particularly the level of income, the growth of income, and the structure of income. Regardless of one’s interpretation of the data, that suggests that economic interventions can build a more peaceful world.  

What are those economic interventions going to be? One is to try and raise growth through a mixture of policies and aid. I have investigated whether aid has any direct effect on conflict risk, and I cannot find any. There are indirect effects through growth, but not direct effects. 

Economic development is, in my mind, an effective medium or strategy for reducing conflict. We have simulated what policy improvement and bigger aid budgets would do over a 5-year period for the typical aid recipient country, and they could bring down the risk of conflict by about one third, which would be a significant accomplishment.

Another policy implication is that primary commodity dependance is quite dangerous. Ten years ago, the World Bank did not know this, but now we recognize the enormous importance of diversifying the economy. Other than Africa, the developing world has massively diversified over the last 20 years, but Africa has not followed the rest of the developing world in this regard. To my mind, the primary economic task for Africa now is to achieve that diversification.

Finally, this analysis has at least one implication for the war against terrorism. International terrorists are using failed states – states where there are civil wars – for safe havens. Failed states are the one type of territory which is absolutely out of reach. Consequently, I believe that one part of the long term strategy to fight terrorism must be to reduce the number of safe havens. 

Of course, that is easier said than done. It is not achieved by bombing them. By bombing, you can destroy a government, but failed states have already achieved that. That is not a remark on what American policy should be, but rather a statement that over the next 10 years, to solve the problem of failed states, we must make development interventions to prevent states from falling into failure, and -- what is even harder -- to rebuild states which are in conflict and coming out of it. 

Compared with the sums of money that will be spent on military and intelligence activities, the amount of money that is spent on a development agenda is absolutely tiny. And yet, our research shows that money spent on a development agenda will substantially reduce conflict risk. I can only hope that this fact will be taken into consideration. 

 
Notes

*) The findings, interpretations, and conclusions expressed in this paper are entirely those of the author. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.
 
 
 

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