The Elusive Peace Dividend of Development Policy: From War Traps to Macro-Complementarities

This article reviews the literature on civil conflict and development with a focus on the socioeconomic consequences of violence and on promising policies for fostering peace. We make four main points. First, one of the reasons conflict is still often overlooked as key factor for development is that conflict costs are typically underestimated, in particular the shadow costs of deterrence. Second, there are several types of war traps that hold countries back, both economically and politically. Third, to break these traps, policies must be calibrated to address jointly both poverty and social tensions, as there is a strong macro complementarity between peace and development objectives. We document how single-minded policies that ignore this dual challenge can spectacularly fail, and we discuss in depth a series of particularly promising policies. Fourth, we highlight the increasing potential of novel data collection methodologies and the need for policy evaluation tools in violent contexts.