Long-term effects of sectarian politics: evidence from Lebanon

We examine the effect of sectarian politics in the presence of weak state capacity on long-term economic growth. To this end, we exploit the 1956 civil uprising between Maronite Christian and Sunni Muslim factions in Lebanon to estimate the impact of sectarian political tensions on long-term growth. To isolate the impact of the uprising, we use synthetic control estimator and match Lebanon’s pre-1956 growth and development trajectory with the rest of the world where such uprising did not occur, and estimate the counterfactual growth trajectory in the hypothetical absence of the sectarian conflict. Our evidence indicates large and pervasive negative growth effects of factionalism. Our estimates imply that Lebanon’s per capita income down to the present day is on average 57% lower than that of its pre-1956 synthetic control group without sectarian clashes, and does not seem to be driven by preexisting or subsequent trends and shocks. The negative long-term growth effect of sectarian conflict is robust to a battery of spatial and temporal placebo checks, choice of samples and is not sensitive to the composition of control groups.