IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1127.html
   My bibliography  Save this paper

Civil War and Human Development: Impacts of Finance and Financial Infrastructure

Author

Abstract

In this paper interactions between finance, development and armed conflict are explored to demonstrate that financial factors are crucial in sustaining conflict-underdevelopment feedback loops. Military expenditure drains resources, financial instability leads to conflict (and vice versa), war retards the development of financial institutions/infrastructure, and interactions between finance and conflict are exacerbated by distributional struggles. Some of these feedback effects are captured within a two-stage model of war, finance and development and this is used as the basis for an empirical analysis. Econometrically, the model is estimated using panel estimation and two stage Probit least squares (2SPLS) binary dependent variable estimation techniques to control for simultaneity and heterogeneity. The results suggest that financial constraints and financial instability increase the chances of civil war directly and, via negative impacts on development, indirectly too.

Suggested Citation

  • Baddeley, M., 2011. "Civil War and Human Development: Impacts of Finance and Financial Infrastructure," Cambridge Working Papers in Economics 1127, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1127
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1127.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2010. "Persistence of Civil Wars," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 664-676, 04-05.
    2. Paul Collier & Anke Hoeffler & Dominic Rohner, 2009. "Beyond greed and grievance: feasibility and civil war," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 1-27, January.
    3. Maarten Voors & Eleonora Nillesen & Philip Verwimp & Erwin Bulte & Robert Lensink & Daan van Soest, 2010. "Does Conflict affect Preferences? Results from Field Experiments in Burundi," Research Working Papers 21, MICROCON - A Micro Level Analysis of Violent Conflict.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Seelanatha, Lalith & Ihalanayake, Ranjith, 2019. "War and peace times, interest margin and commercial bank operations: A case of the Sri Lankan banking sector," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 9(2), pages 122-141.
    2. Mertzanis, Charilaos, 2016. "The absorption of financial services in an Islamic environment," Journal of Economic Behavior & Organization, Elsevier, vol. 132(S), pages 216-236.
    3. Ernestine Atangana, 2022. "With the Continuing Increase in Sub-Saharan African Countries, Will Sustainable Development of Goal 1 Ever Be Achieved by 2030?," Sustainability, MDPI, vol. 14(16), pages 1-28, August.
    4. Olalekan Charles Okunlola & Imran Usman Sani & Olumide Abiodun Ayetigbo & Olajide O. Oyadeyi, 2024. "Effect of government expenditure on real economic growth in ECOWAS: assessing the moderating role of corruption and conflict," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2013. "Seeds of distrust: conflict in Uganda," Journal of Economic Growth, Springer, vol. 18(3), pages 217-252, September.
    2. Aguirre, Alvaro, 2016. "The risk of civil conflicts as a determinant of political institutions," European Journal of Political Economy, Elsevier, vol. 42(C), pages 36-59.
    3. Jetter, Michael, 2016. "Peace, Terrorism, or Civil Conflict? Understanding the Decision of an Opposition Group," IZA Discussion Papers 9996, Institute of Labor Economics (IZA).
    4. Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2013. "War Signals: A Theory of Trade, Trust, and Conflict," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(3), pages 1114-1147.
    5. Michael Jetter & Bei Li, 2017. "The Political Economy of Opposition Groups: Peace, Terrorism, or Civil Conflict," CESifo Working Paper Series 6747, CESifo.
    6. Bodea, Cristina, 2012. "Natural resources, weak states and civil war : can rents stabilize coup prone regimes ?," Policy Research Working Paper Series 6071, The World Bank.
    7. Gerring, John & Thacker, Strom C. & Lu, Yuan & Huang, Wei, 2015. "Does Diversity Impair Human Development? A Multi-Level Test of the Diversity Debit Hypothesis," World Development, Elsevier, vol. 66(C), pages 166-188.
    8. Jie Cai & Lian An, 2014. "Is Protectionism Rational Under the Financial Crisis? Analysis from the Perspective of International Political Relations," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(3), pages 278-299, March.
    9. Burhan, Nik Ahmad Sufian & Mohamad, Mohd Rosli & Kurniawan, Yohan & Sidek, Abdul Halim, 2014. "National Intelligence, Basic Human Needs, and Their Effect on Economic Growth," MPRA Paper 77267, University Library of Munich, Germany.
    10. Gilles Saint‐Paul & Davide Ticchi & Andrea Vindigni, 2016. "A Theory of Political Entrenchment," Economic Journal, Royal Economic Society, vol. 126(593), pages 1238-1263, June.
    11. Stefan Wolff & Simona Ross & Asbjorn Wee, 2020. "Subnational Governance and Conflict," World Bank Publications - Reports 34436, The World Bank Group.
    12. Joan Esteban & Laura Mayoral & Debraj Ray, 2012. "Ethnicity and Conflict: An Empirical Study," American Economic Review, American Economic Association, vol. 102(4), pages 1310-1342, June.
    13. Wim Naudé, 2007. "Peace, Prosperity, and Pro-Growth Entrepreneurship," WIDER Working Paper Series DP2007-02, World Institute for Development Economic Research (UNU-WIDER).
    14. Ngassam, Sylvain B. & Asongu, Simplice A. & Ngueuleweu, Gildas Tiwang, 2024. "A revisit of the natural resource curse in the tourism industry," Resources Policy, Elsevier, vol. 88(C).
    15. Joan Esteban & Massimo Morelli & Dominic Rohner, 2015. "Strategic Mass Killings," Journal of Political Economy, University of Chicago Press, vol. 123(5), pages 1087-1132.
    16. Corinne Bara, 2018. "Legacies of Violence," Journal of Conflict Resolution, Peace Science Society (International), vol. 62(9), pages 1991-2016, October.
    17. Vincenzo Bove & Ron Smith, 2011. "The Economics of Peacekeeping," Chapters, in: Derek L. Braddon & Keith Hartley (ed.), Handbook on the Economics of Conflict, chapter 10, Edward Elgar Publishing.
    18. Ginger Turner & Farah Said & Uzma Afzal, 2014. "Microinsurance Demand After a Rare Flood Event: Evidence From a Field Experiment in Pakistan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 201-223, April.
    19. Sterck, Olivier, 2016. "Natural resources and the spread of HIV/AIDS: Curse or blessing?," Social Science & Medicine, Elsevier, vol. 150(C), pages 271-278.

    More about this item

    Keywords

    Human development; civil conflict; military spending; financial instability; financial infrastructure;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cam:camdae:1127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.