Economic Consequences of Internal Displacement and Its Implications for Social Welfare: A Panel Analysis Across 50 Countries and Territories

Abstract

Internal displacement represents a growing global challenge with significant economic and social welfare implications. By 2024, more than 63 million conflict-affected internally displaced persons (IDPs) were recorded worldwide, underscoring the need for coordinated and sustained policy responses in conflict-affected states. This study examines the economic consequences of conflict-induced internal displacement and its implications for social welfare across 50 countries and territories over the period 2009–2022. Employing fixed effects, generalized least squares (GLS), generalized estimating equations (GEE) and panel-corrected standard errors (PCSE), the analysis provides robust evidence of adverse macroeconomic and health impacts of conflict-affected internal displacement. The results indicate that a 1% increase in conflict-affected internal displacement is associated with a 0.107% decline in GDP growth, a reduction of USD 7.63 in GDP per capita and an increase of 1.02 infant deaths per 1000 live births. The findings further show that stronger rule of law, greater political stability and higher levels of development assistance are positively associated with improved economic outcomes in conflict-affected regions. These results highlight the relevance of internal displacement for achieving the United Nations Sustainable Development Goals, particularly SDG 3 (Good health and well being), SDG 8 (Economics growth) and SDG 16 (Peace, justice and strong institutions), and emphasize the importance of policies that support economic recovery, strengthen public health systems and enhance institutional capacity in conflict-affected settings.