Peacekeeping and Economic Recovery from Conflict

Abstract

Abstract To better understand the large country-level heterogeneity found with respect to post-conflict economic recovery, this paper examines the potential role and impact of UN peacekeeping operations (PKOs) using a dataset which includes key information on civil conflicts and UN PKOs spanning 124 developing economies from 1990 to 2018. Analytical results provide evidence in support of PKOs’ positive impact on post-conflict economic recovery. Recovery growth (defined as a real GDP growth above peacetime growth) is found to only occur when a PKO is deployed and the relationship is stronger for, and likely driven by, the so-called transformative PKOs. Across robustness tests results imply that PKOs are, on average, associated with recovery rates of growth between 2 to 4 percentage points, and thus that peacekeeping could be an important factor in reducing and eliminating conflict-attributable macroeconomic losses. Foreign direct investments (FDI) and official development assistance (ODA) are explored as two potential channels that could help explain the growth results. While results for FDI are inconclusive, ODA results imply that there is a strong association between periods of recovery and ODA (as a percentage of GDP) when recovery periods coincide with the presence of a PKO, and again much stronger for transformative PKOs.