Kleef, Jordi van (2022) The Cost of Wars: A quantitative approach to the relation between war and economic growth. Master thesis.
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Abstract
As the recent outbreak of warfare in Ukraine shocked Europe and the world at large, it reminds us once again that wars are not merely a prominent part of human history but also constitute the reality of the twenty-first century. Wars have indeed been a prevalent topic in recent history and its eradication does not currently seem within reach. They do however come with significant financial costs and physical destruction of economic activity. This paper proposes an empirical study with panel data on the economic impact of wars. Wars are seen as open conflict in countries with direct consequences on their national economic performance. GDP is analysed for nearly all UN member countries over the past sixty years and the results are compared between countries with and without war. Wars are then classified according to their intensity and geographical scale, adding to the depth of the analysis. The same economic measures are applied to the resulting different typologies of war, with different results. The models are also improved by using GDP per capita and GDP growth rates as dependent variables instead of GDP. Since GDP is influenced by many other factors than war, a total of seven control variables are added to the statistical models in order to achieve better accuracy for their results. Additionally, we look at potential spill-over effects on neighbour countries. Based on the results, we draw the conclusion that war does indeed have a direct negative effect on GDP (per capita) growth rate, as well as negative consequences for the economic growth of neighbouring countries. Moreover, there seem to be important differences of economic impact between various wars and conflict intensity appears to be a major denominator for these. While low-intensity conflicts clearly have a lesser impact on economic performance, the case for geographical scale as a determinant of economic impact does not appear to be strongly vindicated by the results.
| Item Type: | Thesis (Master) |
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| Degree programme: | Economic Geography |
| Supervisor: | Ballas, D. |
| Date Deposited: | 03 May 2022 06:37 |
| Last Modified: | 03 May 2022 06:37 |
| URI: | https://frw.studenttheses.ub.rug.nl/id/eprint/3816 |
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