The Investment Climate in Post-Conflict Situations

This paper is a policy review of the role of investment climate in post-conflict situations. It summarizes the broad range of ways in which conflict negatively affects the investment climate, from macroeconomic instability to a degraded regulatory framework. It stresses that attention needs to be paid to the broader "enabling environment," including institutions, governance, capacity, and social capital. It suggests that a vibrant private sector underpinned by a good investment climate is particularly important in the post-conflict recovery phase for three reasons: it generates employment, provides public services where the state has retrenched, and builds social capital. By addressing these important "greed and grievance" factors, the private sector helps reduce the likelihood of a return to conflict. The paper concludes by distilling key lessons relating to the management of the post-conflict reform process. Despite the importance of a good investment climate, greater effort is needed to ensure that private sector development reforms are included in the first round of post-conflict policymaking. Local ownership of reforms and enhanced local capacity to implement them is key to sustainable improvements in the investment climate. Development partners have an important role to play in facilitating dialogue and promoting partnerships between public and private sector stakeholders. At the same time, development partners need to ensure that their presence in fragile post-conflict economies does not damage the very sector they are trying to support.

Bibliographic Details

Main Authors:	Mills, Rob, Fan, Qimiao
Language:	English
Published:	World Bank, Washington, DC 2006-11
Subjects:	ALLOCATION, ALTERNATIVE DISPUTE RESOLUTION MECHANISMS, BUREAUCRACY, CAPITAL COSTS, CAUSES OF CONFLICT, CENTRAL BANKS, CHECKS AND BALANCES, CIVIL WAR, COMMERCIAL DISPUTE, COMMERCIAL DISPUTE RESOLUTION, COMPOUNDING, CONFLICT RESOLUTION, CONFLICTS, CONTRACT ENFORCEMENT, CREATING JOBS, CUSTOMS, DEMOCRATIC REPUBLIC, DIASPORA, DISPUTE RESOLUTION, ECONOMIC ACTIVITY, ECONOMIC GROWTH, EMPLOYMENT, EMPLOYMENT OPPORTUNITIES, END OF HOSTILITIES, EXPROPRIATION, EXTORTION, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SYSTEM, FISCAL POLICY, FOREIGN INVESTMENT, FOREIGN MARKETS, GOOD INVESTMENT CLIMATE, HUMAN RIGHTS, IMPORT DUTIES, INDIRECT TAXES, INFLATION, INFORMAL ECONOMY, INFORMAL EMPLOYMENT, INFORMAL SECTOR, INTENSITY OF CONFLICT, INTERNATIONAL COMMUNITY, INTERNATIONAL INVESTORS, INVESTMENT CLIMATE, JOB CREATION, JOB OPPORTUNITIES, JOBS, LABOR MARKET, LABOR MARKETS, LEGAL FRAMEWORK, LEGITIMACY, LIMITED ENFORCEMENT CAPACITY, MACROECONOMIC STABILITY, PEACE PROCESS, POLICY REFORMS, POLITICAL ECONOMY, POLITICAL ENVIRONMENT, POLITICAL POWER, POST-CONFLICT, POST-CONFLICT COUNTRIES, POST-CONFLICT ECONOMIES, POST-CONFLICT ECONOMY, POST-CONFLICT PERIOD, POST-CONFLICT SITUATION, POST-CONFLICT SITUATIONS, PREVIOUS SECTION, PRINCIPAL SOURCE, PRIVATE COMPANIES, PRIVATE ENTERPRISE, PRIVATE FIRMS, PRIVATE INVESTMENT, PRIVATE PARTNERSHIP, PRIVATE PROVIDERS, PRIVATE SECTOR, PRIVATE SECTOR ACTIVITIES, PRIVATE SECTOR ACTIVITY, PRIVATE SECTOR FIRMS, PRIVATE SECTORS, PRODUCT MARKETS, PRODUCTIVE CAPACITY, PRODUCTIVITY, PROFITABILITY, PROPERTY RIGHTS, PUBLIC SECTOR, PUBLIC SERVICE, PUBLIC SERVICES, PUBLIC WORKS, REBEL GROUPS, REDUCING POVERTY, REGULATORY AUTHORITIES, REGULATORY COSTS, REGULATORY FRAMEWORK, REGULATORY FRAMEWORKS, REPUBLIC, RISK FACTORS, SKILLED LABOR, SOCIAL CAPITAL, SPECIALIZATION, STATE-OWNED ENTERPRISES, SUPPLIERS, TAX, TAX SYSTEM, TAXATION, TRADE TAXES, TRAINING PROGRAMS, UNINTENDED CONSEQUENCES, UNSKILLED LABOR, VERTICAL INTEGRATION, WORKERS, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2006/11/7158780/investment-climate-post-conflict-situations https://hdl.handle.net/10986/9029
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