Conflicts and Returns to Stability in Developing Countries : A Comparative Analysis

Sub-Saharan Africa's dismal development outcomes -- growth collapse and declining real income -- are often used to highlight its sharp development contrast with other regions of the developing world. Drawing on a large cross-section analysis, this paper shows that Africa's underlying dismal records can also be largely accounted for by the skewed distribution of growth in the post-independence era. In particular, structurally low investment rates in a context of high political risk and uncertainty undermined growth prospects in the region. However, counterfactual simulations based on a variation of neoclassical growth models and under the hypothetical equalization of political risk profile alternative result in large economic returns, reflected in the significantly higher level of aggregate output and income in the subset of conflict-affected countries. Income gets even higher when the hypothetical reduction of political risks alternative is accompanied by sustained increases in capital accumulation.

Bibliographic Details

Main Author:	Fofack, Hippolyte
Language:	English
Published:	2010-09-01
Subjects:	ABSOLUTE POVERTY, ACCOUNTING, ADVANCED ECONOMIES, ADVERSE EFFECTS, AGGREGATE OUTPUT, AGRICULTURAL SECTOR, AGRICULTURE, BALANCE OF PAYMENTS, BALANCE OF PAYMENTS CRISES, BANK POLICY, BENCHMARK, BENCHMARKS, CAPITAL ACCUMULATION, CAPITAL FLIGHT, CAPITAL FLOWS, CAPITAL FORMATION, CAPITAL STOCK, CIVIL WAR, CIVIL WARS, COMMODITIES, COMMODITY, COMMODITY EXPORTS, COMPARATIVE ADVANTAGE, COMPARATIVE ANALYSIS, CONFLICT, CONFLICT PREVENTION, CONFLICTS, CONSTRAINT, COUNTERPARTS, COUNTRY DUMMIES, COUNTRY RISK, CRISES, CROSS-BORDER CAPITAL, CURRENT ACCOUNT SURPLUSES, DEATHS, DEBT, DEBT STOCKS, DEPENDENT VARIABLE, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPING WORLD, DEVELOPMENT BANK, DEVELOPMENT CENTRE, DEVELOPMENT ECONOMICS, DEVELOPMENT GOALS, DEVELOPMENT INDICATORS, DEVELOPMENT PATH, DEVELOPMENT PATHS, DISEQUILIBRIUM, DISTRIBUTION OF INCOME, DIVERSIFICATION, DIVIDEND, DIVIDENDS, DOMESTIC SAVINGS, DRUGS, ECONOMIC COOPERATION, ECONOMIC DEVELOPMENT, ECONOMIC EFFICIENCY, ECONOMIC GROWTH, ECONOMIC LITERATURE, ECONOMIC OUTCOMES, ECONOMIC OUTLOOK, ECONOMIC PERFORMANCE, ECONOMIC POLICY, ECONOMIC RESEARCH, ECONOMIC THEORY, ECONOMICS RESEARCH, ELASTICITY, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EMPIRICAL MODEL, EMPIRICAL MODELS, EMPIRICAL RESULTS, EMPIRICAL STUDIES, ESTIMATED COEFFICIENT, ESTIMATED COEFFICIENTS, EXOGENOUS RATE, EXPECTATION GAP, EXPECTED RETURNS, EXPENDITURE, EXPORTS, EXPOSURE, EXPOSURES, EXTERNAL DEBT, EXTERNAL SHOCKS, FINANCIAL CRISIS, FISCAL DEFICITS, FOREIGN ASSET, FOREIGN ASSET POSITIONS, FRONTIERS, GDP, GDP PER CAPITA, GLOBAL ECONOMIC LANDSCAPE, GLOBAL ECONOMY, GLOBAL LEVEL, GLOBAL TRADE, GLOBALIZATION, GOVERNMENT SUPPORT, GROSS DOMESTIC PRODUCT, GROWTH MODEL, GROWTH MODELS, GROWTH PERFORMANCE, GROWTH PROCESS, GROWTH PROSPECTS, GROWTH RATE, GROWTH RATES, GROWTH THEORY, HIGH GROWTH, HUMAN DEVELOPMENT, HUMAN DEVELOPMENT REPORT, HUMAN SECURITY, IMF, INCOME GROWTH, INDEPENDENCES, INFRASTRUCTURE DEVELOPMENT, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INVESTMENT FUNCTION, INVESTMENT RATES, LABOR FORCE, LIFE EXPECTANCY, LIVING STANDARDS, LONG-RUN GROWTH, LOW-INCOME COUNTRIES, MACROECONOMIC INSTABILITY, MACROECONOMIC STABILITY, MARGINAL PRODUCTIVITY, MASSIVE INVESTMENTS, MEETING, MISMANAGEMENT, MONETARY FUND, NATIONS, NATURAL RESOURCE, NATURAL RESOURCES, NEGATIVE EFFECT, OIL CRISIS, OUTPUT GROWTH, PEACE, PER CAPITA INCOME, POLICY RESEARCH, POLITICAL ECONOMY, POLITICAL INSTABILITY, POLITICAL RISK, POLITICAL RISKS, POLITICAL STABILITY, POLITICAL VIOLENCE, POOR GOVERNANCE, POSITIVE EXTERNALITIES, POVERTY RATES, POVERTY REDUCTION, POVERTY TRAPS, PRIMARY PRODUCTS, PRIVATE CAPITAL, PRIVATE INVESTMENT, PRIVATE INVESTMENTS, PRODUCTION FUNCTION, PRODUCTION STRUCTURES, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROTECTIONISM, PUBLIC INVESTMENTS, PUBLIC POLICY, RATE OF INVESTMENTS, REAL INCOME, RECONSTRUCTION, RESERVE, RESERVES, REVOLUTION, RICH COUNTRIES, RISK PROFILE, SIGNIFICANT REDUCTION, SKEWED DISTRIBUTION, STATE INTERVENTION, TECHNOLOGICAL CHANGE, TERMS OF TRADE, THIRD WORLD, TOTAL FACTOR PRODUCTIVITY, TOTAL FACTOR PRODUCTIVITY GROWTH, TRADE SHOCKS, UNDP, VICTIMS, VIRTUOUS CYCLE, VIRTUOUS CYCLES, VOLATILITY, WAR, WARS, WORLD DEVELOPMENT, WORLD ECONOMY, WORLD TRADE,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100920133742 https://hdl.handle.net/10986/3911
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