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Around the World, Across the Political Spectrum

War and Development: Is the Stagnation the Price of Peace?

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By David Shipton

Bemoaning the contemporary prevalence of derivative film plots and monotonous cuisine, Financial Times columnist Janan Ganesh asserted earlier this month that “the price of peace is stagnation” (Ganesh, 2024). The timing of this claim – during a thirty-year peak in global conflict (Cheatham, 2023) with wars in Gaza, Ukraine, Sudan and Myanmar killing hundreds each day – invites a degree of scepticism; one wonders if Ganesh expects a flurry of new recipes to emerge from Khan Yunis, or an Oscar-winning screenplay to be penned in blood-soaked Darfour. Intentionally or not, however, Ganesh’s claim draws upon a well-trodden but unsettled debate as to whether war accelerates or reverses development. Although Russia’s full-scale invasion of Ukraine is a relatively rare example of a contemporary inter-state conflict, the bulk of this debate has centred upon civil wars, which have accounted for the majority of wars since 1945 (Acemoglu et al, 2010) and remain by far the most common form of conflict today (Our World In Data, 2024).  Focusing largely upon civil conflicts, this article revisits the literature regarding the destructive or creative impact of war and finds little evidence to support Ganesh’s case for a silver lining amidst the chaos. 

For much of the 1990s and 2000s, the inimical effect of war on development was viewed as axiomatic by a range of scholarship and international development organisations, from the World Bank (2011) to the UK Department for International Development (2006). Echoing economist Paul Collier’s influential dictum that civil war is “development in reverse” (2003), these perspectives attributed the persistence of “underdevelopment” in much of the post-colonial world to the abundance of intrastate conflict since 1945 and prioritised the resolution of war as a developmental priority. To its critics, however, this characterisation of war is a problematic liberal myth which naively regards war as an aberration and ignores its historic role as a driver of progress (Cramer, 2002). Premised on methodologically-flawed quantitative studies, this literature – it is argued – considers only one side of the “balance sheet” of war (Gutierrez-Sanin, 2009; 7) and ignores its varying impacts across society. Although few support Edward Luttwak’s provocative plea for the international community to “give war a chance” (Luttwak, 1999), those who reject the framing of war as exclusively retrograde propose different policy approaches, often arguing for more limited international intervention (Weinstein, 2005).

The contours of this debate are shaped by disciplinary silos and evolving conceptions of the meaning of “development”. As noted by Brett (2009), there is a cleavage in development theory between liberal theories which foreground economic growth and the free market (Collier, 1998) and structuralist critiques which emphasise the role of the state in delivering “development” (Huntington, 1968/1996; Fukuyama, 2004). Another tension exists between grand theories which envisage development proceeding teleologically along pre-determined rachets (often mimicking the historical experience of the West) (Rostow, 1959; Marx, 1867/1990), and those which study the causes and consequences of underdevelopment, often with reference to human development index (HDI) indicators such as life expectancy and education (Sen, 2009). Finally, a growing body of literature looks beneath macro indicators to assess the distribution of resources between groups within and outside the subject state. Persistent imprecision as to which form of development is being discussed means that scholars on both sides of the “development in reverse” debate are often talking at cross-purposes.

Drawing on these evolving notions of development, this article will first assess the arguments for the “destructive” function of war before addressing the literature regarding war’s “creative” role in developing new institutions and political economies. As we shall see, war's impact on development is uneven and disjointed, varying enormously across different contexts. However, while the “development in reverse” thesis ignores the ability of local and global actors to benefit from war, it fits (albeit imperfectly) onto conceptions of development which are focused on socioeconomic and human development indicators, and many of the arguments asserting war’s developmental potential suffer from significant limitations.   

1: War the Destroyer?

Given the disciplinary orientation of its most prominent advocates, it is unsurprising that the “development in reverse” literature has focused upon economics. In his 1999 study of post-1965 civil wars, Collier found that civil war reduced annual economic growth rates by 2.2%, with conflicts enduring over 15 years contracting per capita GDP by 30% (Collier, 1999: 175). This conclusion was swiftly supported in other quantitative studies, which found that civil war is “one of the main causes of human suffering and economic underdevelopment” (with a more adverse developmental impact than natural disasters) (Stewart, 2001: 1) and creates a socioeconomic “development gap” between those countries which have suffered civil war and those which have not (Gates, 2011).

The theoretical underpinnings of this causal connection are straightforward and consistent with liberal economic theory. War, convention holds, directly reduces the macro-economic potential of a country by destroying its human and physical capital (Koubi, 2005). These impacts are exacerbated by indirect effects such as inflationary pressure and a collapse of state capacity and foreign direct investment (FDI). On a micro-economic level, war is felt by citizens through a reduction in household income, higher prices and a collapse in the availability of consumables and public services (Ghobarah, 2003). More insidiously, war (especially civil war) erodes trust, suppresses entrepreneurship and precipitates an informalisation (or criminalisation) of the local economy. These impacts are compounded by the emergence of a “conflict trap” in which poor countries become engulfed in a vicious cycle in which “war wrecks the economy and increases the risk of further war” (Collier, 2003:1). Not confined to the subject country, the devastation unleashed by war spreads beyond its borders through refugees, terrorism, drugs and disease (Sesay, 1995).

Significant empirical evidence supports this grim picture. The human capital costs of war alone are unquestionably enormous, with 20 million people killed (directly and indirectly) in civil conflicts between 1948-2008 (Besley, 2008). Wartime casualties are often dwarfed by the mass outward flow of civilians during wartime, sometimes by the most educated in society. Seven million Syrians, for example, left the country after 2011, including around half of the country’s doctors (Brookings, 2016). Many refugees do not return, permanently reducing the country’s labour force and hampering reconstruction. A 2013 study found, for instance, that only 17% of Iraqi doctors who had fled the country after 2003 intended to return (Al-Khalisi, 2013: 363).

Similarly catastrophic trends can be witnessed in the destruction of physical capital. War in Mozambique killed 80% of the nation’s cattle (Brück, 1997), whilst almost all of Syria’s oil refinery infrastructure was destroyed between 2011 and 2020 (Seifan, 2021). In addition to suppressing economic activity, studies suggest that war can foster and perpetuate “underdeveloped” economic structures, with primary industries growing as a proportion of national income at the expense of more “developed” manufacturing and tertiary sectors. In wartime Uganda, for example, subsistence agriculture increased from 20.5 to 36% of GDP, whilst “war-vulnerable” sectors such as construction, manufacturing and distribution decreased from 42.5 to 24% (Collier, 1999: 11).

Critics of the “development in reverse” thesis often argue that despite presenting empirical objectivity, much of its supporting quantitative literature is methodologically unsound (Nathan, 2005). Data from warzones are inherently unreliable (Dawson, 2001) and the exclusion of the informal economy (which grows during wartime) risks overstating decline (Maher, 2018). Quantitative studies also suffer from an endogeneity problem in which the causes and effects of war become tangled together (Blattman, 2010). Is underdevelopment a driver of war, or a consequence? While scholars have questioned the causal connection between economic underdevelopment and war (Miller, 2001), low-income countries are empirically far more likely to experience conflict, posing a significant methodological challenge for quantitative studies of wars’ effects. Further, a range of studies question the scale and longevity of wars’ deleterious impacts upon socioeconomic conditions. For example, one study finds that even where the economic impact of war is destructive, those impacts are confined to the short-term, with above average growth in subsequent years rendering the long-term impact of economic development largely negligible (Murdoch & Sandler, 2002).

Although the stridency of many of Collier’s claims – including his assertion that the average civil war costs “US$50bn” (Collier, 2004b; 2) – warrant scepticism, there is a risk of overstating the strength of these counterarguments. Firstly, if data collection is hindered by the informalisation of a wartime economy then this itself is arguably evidence of the deleterious impact of war. Secondly, while issues of causation cannot be conclusively resolved without an exact counterfactual, the likely impact of war can be illustrated with the use of a similar peaceful country as a baseline. Comparisons are often drawn, for example, between the diverging GDP per capita performances of Burkina Faso and Burundi in the years after the latter entered war (Gates, 2012). Thirdly, the fact that, in the right circumstances, economic “recovery” after war can be relatively swift does not defeat the argument that war reverses development, especially given that the recovery of human capital (including education and health) often lags behind other indicators (Blattman, 2010).

Finally, critiques of the “development in reverse” thesis sometimes overlook the volume of studies which show how economic dislocation can translate into changes in HDI indicators such as life expectancy and calorie consumption, which may be less susceptible to methodological pitfalls caused by the informalisation of the wartime economy. Studies suggest, for example, that civil conflict reduces access to drinking water (Gates et al. 2012) and reverses centuries of development in natal care. “The classical demographic cycle of the 18th century” writes Guha-Sapir, “becomes the reality in conflict settings” (2011: 11). Civil conflict even reversed the physical development of children in Zimbabwe and Burundi, who were shorter than in previous generations and neighbouring countries (Alderman, 2006). Other research suggests that prolonged exposure to violence in civil war leads to long-term reductions in physical and mental health (Palic, 2015). There are, of course, challenges to this account. The Human Security Report Project (HSRP) has asserted that that mortality rates generally decline during periods of contemporary armed conflict (HSRP, 2011), and children’s education sometimes improves during war (HSRP, 2012). However, even in these studies, the damaging impact of war is mitigated by international aid and geographically-confined fighting, and wartime HDI improvements lag behind peacetime trends. Further, while scholars dispute the extent to which the outbreak of war is due to socioeconomic factors (Call, 2012), post-conflict countries are far more likely to host fresh violence than hitherto peaceful states, compounding the “reverses” suffered (World Bank, 2011).

By attempting to apply a universal theory across all cases, “development in reverse” narratives can, however, obscure variations in the socioeconomic impacts across different conflicts. Disaggregated studies show that conflicts which are regionally-limited in scope (e.g., Colombia and Sri Lanka) generally have a smaller impact on GDP (Diaz, 2013), while wars which witness violence across the country (e.g. Syria) can be catastrophic for the economy (World Bank, 2022). Indeed, the unexpected refusal of the Colombian electorate to agree to peace terms with FARC in 2016 has been attributed in part to the fact that vast swathes of the country experienced relatively little violence (Branton, 2019).  In HDI terms, the severity with which a civil war is felt depends on many factors, including GDP per capita, state capacity and the efficacy of humanitarian relief. For example, calorie consumption improved during conflict in Guatemala and Lebanon, while collapsing in the poorer Ethiopia and Mozambique (Stewart, 2004). Post-war recovery is also contingent on these factors. Post-genocide Rwanda’s economic recovery is often attributed to substantial capital inflow from international donors (Ansoms, 2005), whereas Vietnam’s recovery is usually linked with high state capacity (Brodsgaard, 2000). Although a relatively consistent net trend, the damaging socioeconomic and HDI impact of civil war is thus mediated by a range of contingent factors, and the context of violence overrides theory in determining its socioeconomic and HDI effects.

2: War the Creator?

Much of the literature framing conflict as a driver of progress is focused upon large interstate wars between rich countries which fostered important technological innovations and sociopolitical developments (see Ginsburg, 2014). From jet engines and nuclear power to GPS and the internet, there are countless examples of twentieth century warfare driving innovations which would later acquire civilian uses, materially improving lives into the future (see NATO, 2024). But as nuclear deterrence and NATO’s Article V has reduced the likelihood of symmetric warfare between developed states, contemporary conflicts are overwhelmingly fought in poor countries using small arms (Lock, 1997) and have so far provided little impetus for peacetime technological progress. Even in Ukraine, which has served as a testing ground for new technologies, arguably the most significant battlefield innovation – FPV drone – was originally designed for civilian use (rather than vice versa) (see Reuters, 2024). The bulk of the casualties on both sides have been inflicted by artillery shells manufactured decades ago and fired across battlefields that resemble the Somme or Kursk (see Cranny-Evans, 2023).

Nevertheless, a growing body of literature emphasises war’s role in driving institutional development and creating new forms of wealth and patronage. Foremost amongst these accounts is the “bellicist” approach of Charles Tilly, who argued that internal conflict had driven the development of the early-modern state in Europe by centralising power, rationalising tax systems and forging modern political institutions which became permanent over time (1975). This view recasts war as – like Marx’s view of capitalism – a regrettable but necessary process of development.

The historical accuracy of Tilly’s thesis is, however, disputed. Gorksi cites external factors as driving state-formation in Europe (2017), and Kaspersen notes that the militaries of Europe bureaucratised centuries after civil institutions (2017). Other critics argue that Europe's militarisation hindered economic growth (Kaldor, 1981) or that most of Europe’s “developmental” policies emerged after its post-1945 demilitarisation (Huber, 2001). Research on statebuilding from outside Europe has also challenged “the advisability of using such idiosyncratic experience as early modern Western Europe for the construction of a universalistic paradigms” (Centeno, 1997; 1598). Studies of conflict in Latin America (Centeno, 1997) and Africa (Herbst, 1990) indicate that warfare damaged, rather than constructed, political and social institutions, while Costa Rica’s economic, human and democratic development after the abolition of its armed forces in 1949 challenges the notion that war is a pre-requisite to modernity (Fitch, 1998). Increasingly, European states’ wartime “development” appears an exception, arising in part from colonialism which simultaneously perpetuated “underdevelopment” outside of Europe (Mann, 2012).

Some contemporary conflicts have, however, likely contributed towards statebuilding. In Vietnam, where the victorious north established a sophisticated fiscal state and a modern bureaucracy, Taylor finds “strong evidence that Tillyian mechanisms can operate in the contemporary world” (2008; 42). Studies from Sri Lanka and Colombia also indicate that war may have facilitated the development of state capacity by promoting fiscal rationalisation and bureaucratic governance (Diaz, 2013). In each case, however, the statebuilding function of war appears contingent upon a decisive military victory (which often eludes combatants) and the presence of other factors, ranging from the ethnic homogeneity and revolutionary ideals of Vietnam to the regionally-peripheral fighting in Sri Lanka and Colombia (Diaz, 2013; Alesina, 2003). In other cases, however, war appears to have weakened the state by reducing administrative capacity, increasing corruption and dispelling shared conceptions of the public good (Sandholtz, 2000). While war can at times help precipitate the development of a modern state, it is therefore neither a necessary nor a sufficient condition for statebuilding, and may “reverse” its development.

A more nuanced understanding of the impact of war can be found in the political economy approach, which generally uses qualitative case studies to understand how evolving economic opportunities and political structures shape the development of wars (Ballentine, 2003). Whilst lacking the empirical rigor of quantitative research, this approach explores the functional utility of conflict and its evolution over time, blurring the boundaries between “war” and “peace”. The fact that some groups “do well out of war” is, of course, explicitly acknowledged by Collier and forms the basis of his “greed” thesis which sought to explain the persistence of self-financing civil wars with reference to the plunder of primary commodities (Collier, 2000: 104). In Sierra Leone, for example, the RUF and the military collaborated to exploit diamonds (Keen, 2000), while in Colombia the FARC profited from cocaine sales during wartime (Collier, 2004). But the depiction of these groups “either as purely brutal, wartime speculators, economic criminals, or as abstract beneficiaries of wartime distortions, whose ill-gotten gains need to be tempted back into a peacetime economy” has, in the view of some, led these wartime benefits to be unfairly dismissed as inherently retrograde (Cramer, 2006: 40).

Political economy studies of Somalia (Menkhaus, 2004) and DRC (Carayannis, 2018) reveal that conflict can create new and distinctive political and economic structures which are inherently different from those which came before, challenging the rhetorical formulation of “development in reverse”. Illustrating the rise of substate entities which provide a degree of law and security, Menkhaus’ study of Somalia also persuasively replaces the concept of a “conflict trap” with a “cyclone” which “feeds off itself in the fashion of a vicious cycle” but changes its environment in a manner which can bring about the cessation of conflict (Menkhaus, 2004; 153). But while unquestionably challenging to reductive notions of a “breakdown” in war, these transformations sit uncomfortably with measures of “human” development, which have become increasingly influential in international organisations (see United Nations, 2015). Indeed, the fact that actors have the agency to survive and profit during war cannot obscure the underlying realities of macroeconomic stagnation and low HDI performance in Somalia and DRC (HDI, 2023), or the enduring absence of a “modern” state.

As well expanding the “shadow economy”, however, war “can also facilitate the growth of the formal, state-controlled economy” (Maher, 2018: 58). In Colombia’s oil-rich region of Arauca, for instance, violence perpetrated by government troops and right-wing paramilitaries facilitated significant increases in FDI by repressing communities inimical to the oil industry and protecting economically-important infrastructure. In this case, Colombia’s FDI did not increase by an average of 22% per year “in spite of” war, but because of it (Maher, 2015). Similarly, in Angola, FDI from transnational corporations increased during war as oil-rich regions became depopulated by fighting (Berdal, 2003).

Indeed, the integration of many contemporary wars into the globalised economy has helped to spread the fruits of conflict across the world – from DeBeer’s profits from blood diamonds in Angola (Pugh, 2004) to the export of precious metals from wartime DRC (Cater, 2003). Not confined to commodity-based economies, there is accumulating evidence that the phenomenon of wartime FDI increases can also be witnessed in service and manufacturing sectors (Driffield, 2013). Studies of Mexico’s political economy also reveal that the drug money arising from widespread cartel violence provided much-needed liquidity to US banks during the 2008 financial crisis (Mercille, 2011). This challenges the liberal assumption that war is hostile to the interests of capital and illustrates that conflicts can help “develop” sections of the formal as well as the informal economy, even if this is unlikely to outweigh the net economic costs of war for the subject country. 

Conclusion

As we have seen, there are clear limitations to the dictum that war reverses development, which falsely implies both universality across different contexts and a return to a pre-war developmental state. And while war often enriches local and global actors at the expense of the population as a whole, it should be remembered that wartime economies hold no monopoly on inequality, with nine of the ten most unequal countries in the world currently (at least ostensibly) free from conflict (WPR, 2023). However, while criticism of the “development in reverse” thesis has become almost a rite of passage in contemporary civil war literature, bellicist assertions of war’s capacity to create modern institutions may also have limited application to contemporary intrastate conflict, and there is strong evidence to suggest that conflict’s impact upon macro socioeconomic conditions and human development (foremost in development agencies’ understandings of “development”) is overwhelmingly regressive. Stagnation, it seems, is usually another price of war.

David Shipton is a lawyer and postgraduate student in Conflict, Security and Development at King’s College London.

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