The economics of peace and violence

Inclusive Economy18 Jun 2013Karlijn Muiderman

Violence cost $9,46 trillion (€9,460,000,000,000) in 2012. A key aim of the Global Peace Index (GPI) is to show that conflict impacts everyone and that the amount spent on war and conflict weighs heavily on the global economy. It fits in with the trend of moving away from aid to cooperation with self-interest. However, what is really relevant is what remains hidden, that is what the GPI does not show.

Steve Killelea, founder and director of the Institute of Economics and Peace (see box) came to The Hague to launch his organization’s GPI at the ISS. Steve had a sore throat from his earlier launches in New York, London and Milan and rapidly presented all the indicators, statistics and graphs, which were impossible to grasp in such a short timeframe. It left you baffled and asking yourself what you had just seen? However, once you start digesting the wealth of information, the GPI approach seems to be aimed at overpowering the audience with colourful stats and figures that we are so keen to add to policy documents. It is like jumping on a train without asking where it came from and why it is heading in a particular direction. The most important thing is that something is, at least, happening.

“A wealthy nation is a happy nation, right?”, Steve asks rhetorically. The 2013 GPI interprets six year trends and their correlations with socio-economic factors. The GPI team therefore integrated gross domestic product (GDP) as a proxy for peaceful societies. In addition, the economic impact of violence and peace insecurity has a prominent position. After all, peace is of value to all of us.

Libya is the biggest riser on the GPI and Syria the biggest faller. Sub-Saharan Africa is no longer the least peaceful area, with South Africa and the Middle East having taken over that dubious honour. The least peaceful countries have become less peaceful, showing that the MDGs did not have any affect there. What is more, military intervention has a spill-over effect in the west (for example terrorist attacks on western targets). While these trends are no surprise and, indeed, common knowledge, as are the best performers in the Nordic region, the middle section of the GPI ranking is much less transparent.

The IEP and GPI

The 2013 Global Peace Index (GPI) [link] is the seventh edition. First launched in 2007, GPI ranks and compares the peacefulness of over 160 countries using 22 indicators, combining internal and external factors ranging from a nation’s level of military expenditure to its relations with neighbours. It is compiled by the Institute of Economics and Peace which is an international think tank that studies the inter-relationships between business, peace and economics with particular emphasis on the economic benefits of peace [link]. The institute also produces the related indexes: the Terrorism Index, the US Peace Index and the UK Peace index.

Three prominent speakers played the devil’s advocate at the ISS launch. These were Prof. Dr Mohamed Salih (ISS), Ivan Brisco (CRU) and Prof. Dr Syed Mansoob Murshed (ISS). Salih asked why there was no correlation with the Human Development Index to define positive peace. He stressed the importance of creating linkages with the development agenda with the most striking one being that the economic impact of homicide was $1.43 trillion (1,430,000,000,000) in 2012, which is 75 times the size of official development aid (ODA) that year. Ivan Briscoe noted that the economic benefits of war are being overlooked, for example weapons trade and conflict financed by the drug trade in Central America. The GPI also indicates that Mexico is not at war despite it having the highest score as regards violent crime, homicides and deaths. So what does war mean? Is it no more than a political connotation? Murshed is worried that the different indicators will negate each other. The GPI does not indicate civil war and conflict between ethnicities like Hutus and Tutsis and Sunnis and Shi’ites despite these underlying values being crucial in order to understand, and address, conflict.

Inequality is bad for peace

These prominent speakers all criticize the incompleteness of the GPI. It seems as if it is just too difficult to measure peace. The indicators on the website show that, of the 21 indicators, 19 measure war and terror: perceived criminality in society, homicides, access to weapons, violent demonstrations, etcetera. The GPI is therefore the result of reversing indicators with peace being defined by the absence of violence and fear of violence. These are called the negative peace indicators, named after Johan Galtung. To deal with this, the Institute for Economics and Peace came up with positive peace indicators, that is the attitudes, institutes and structures to create peace. Several things are certain. Peacefulness is increased by higher incomes, better social services, equal and trustful societies and smaller populations. However, they conclude that there is still insufficient research to allow a full understanding of the underlying consequences.

Underlying regional causes

We cannot predict what the best approach is to reversing the downward spiral effect of violence and conflict per country, and especially per region. The GPI is a good tool to explore global trends within countries and to compare countries over time on their performances. It provides information on the progress or decline of each of the indicators. For example, domestic and internal violence in Syria has doubled over the last two years (2.5 in 2011 and 5 in 2013) and so has the UN’s peacekeeping funding (from 1.6 in 2011 to 3.0 in 2013). However, this is not an instrument to base policy on because peace building should do justice to the underlying causes. We should therefore study all the indicators one by one and analyse these patterns.