Edited by Christopher J. Coyne and Rachel L. Mathers
Nathan Fiala and Stergios Skaperdas 10.1 INTRODUCTION Since the end of World War II, civil wars have taken place in over 70 countries, resulting in millions of human deaths and high economic costs.1 In the Democratic Republic of the Congo (formerly Zaire) alone, more than four million human beings have perished and many others have been displaced or completely impoverished since 1998 (Prunier 2009).2 The countries that have experienced civil wars are poor and there is a high correlation between per capita income and the incidence of civil war (see, for example, Collier et. al. 2003, p. 55). Even though traditional growth theory and development economics do not take into account the economic effects of civil wars, it would be hard to argue that countries involved in civil wars are not harmed economically. Moreover, low levels of per-capita income and economic shocks can feed back into inducing civil wars (see Miguel, Satyanath and Sergenti 2004). Thus, civil wars have high costs that cannot but impair economic performance whereas bad economic performance and lower levels of income increase the risk of civil war. We review some of the costs of civil wars, following Skaperdas (2009), in Section 10.1 of this chapter. Direct costs include destroyed public infrastructure, factories, machinery, housing and other physical property; deaths, physical and mental injuries and the future costs of caring from those who become disabled; and the extra costs of arming and lost equipment. Indirect or induced costs of civil wars include population displacement; reduced...
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