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Fiscal consequences of armed conflict and terrorism in low- and middle-income countries [An article from: European Journal of Political Economy]
Description
This digital document is a journal article from European Journal of Political Economy, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
The paper examines the fiscal effects of armed conflict and terrorism on low- and middle-income countries using two approaches. First, an analysis of 22 conflict episodes shows that armed conflict is associated with lower growth and higher inflation, and has adverse effects on tax revenues and investment. It also leads to higher government spending on defense, but this tends to be at the expense of macroeconomic stability rather than at the cost of lower spending on education and health. Second, econometric estimates provide some support for the hypothesis that conflict and terrorism have a significant negative impact on growth through changes in the composition of government spending. There is also some evidence that armed conflict has a direct, significant impact on growth, independent of its impact on government spending. Thus, there is potential for a sizable ''peace dividend'' for countries that are able to resolve conflict and terrorism.
Description:
The paper examines the fiscal effects of armed conflict and terrorism on low- and middle-income countries using two approaches. First, an analysis of 22 conflict episodes shows that armed conflict is associated with lower growth and higher inflation, and has adverse effects on tax revenues and investment. It also leads to higher government spending on defense, but this tends to be at the expense of macroeconomic stability rather than at the cost of lower spending on education and health. Second, econometric estimates provide some support for the hypothesis that conflict and terrorism have a significant negative impact on growth through changes in the composition of government spending. There is also some evidence that armed conflict has a direct, significant impact on growth, independent of its impact on government spending. Thus, there is potential for a sizable ''peace dividend'' for countries that are able to resolve conflict and terrorism.
