The Global Economic Impact of Conflicts
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| Pages: | 132 : 139 |
| Abstract: | From Adam Smith perception that conflicts are a waste of society’s resources to more recent realistic approaches that try to analyze both the advantages and disadvantages that conflicts generate, economy and war have always been intertwined, economic reasons being one of the major starters of wars, while wars have always had long-lasting effects on states’ economies. The literature regarding the economic effects of conflict has significantly developed in the past decades, after it became clear that the impact of contemporary wars is no longer local or regional, but the ramifications and rippling effects can also touch countries or regions that are not directly involved or do not even have significant direct economic ties with the belligerents. After a brief introduction into conflicts and their recent development, we analyzed the specialized literature to see the theoretical models through which modern wars affect the global economy. We then applied the models to one of the most recent armed conflicts, the one in the Middle East, as we considered it a quintessential example on how the multi-channel shock rewrites trade rules, triggers inflation and drives structural economic divergence. We concluded that the global consequences can easily spiral out of control and beyond the initial will of engaged states which, in our vision, should become a deterrent and, hopefully, lead to better international mediation mechanisms. |
| JEL classification: | F51, N40, D74 |
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F51, N40, D74
