Abstract
Another approach for measuring the overall economic impact of a civil war is by creating a hypothetical trajectory that the economy could have taken in the absence of conflict, and then juxtaposing it with actual developments to obtain the cost incurred. The method involves the creation of a “synthetic control” from a properly weighted average of other regions that are otherwise similar to the inflicted area. With regards to national civil wars, such an assumption is far from being realistic, as other countries have different institutions and may be subjected to idiosyncratic shocks. This chapter describes a modified framework, where a synthetic control is setup by stages, with each stage including a specific set of shocks.
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Notes
- 1.
Eastern European countries would be chosen as “synthetic controls” for Greece in case the Civil War had been won by the Communist Party.
- 2.
Spain and Finland are excluded from both groups because they were allied with Germany for a substantial period of WW2. UK is left out of the second group because it was not occupied during WW2.
- 3.
Denmark, Norway, and the Netherlands were liberated in May 1945. Most of Belgium got free by the end of 1944 and the remainder in early 1945. Mainland Greece was liberated in October 1944, but Crete remained under German control until June 1945.
- 4.
The southern part of France was under special collaborationist arrangements with Germany until it was fully occupied in 1942. Furthermore, France in the 1950s was involved in two external conflicts, Indochina and Algeria.
- 5.
Norway entered the then European Community in 1969 and exited in 1973.
- 6.
- 7.
From Fig. 1, it is apparent that the rebound in each economy was roughly symmetric to its suppression during the war.
- 8.
As noted by Price (1955).
- 9.
If scaled by GDP per capita at the beginning of the estimation period, these constants denote convergence effects towards the control group of neutral countries.
- 10.
Apart from availability of data, the choice of controls is not straightforward in practice. Even with many compatible regions, Abadie and Gardeazabal (2003) finally choose only two of them as the control group.
- 11.
For this reason, the 30 years from 1945 to 1975 are popularly called Les Trente Glorieuses.
- 12.
Vetsopoulos (2007, Table 1) reports that, during 1947–1952, the Economic Cooperation Administration (ECA) disbursed to Greece USD 949 million. This amount corresponds to USD 126 per head and would have led to a synthetic GDP path much higher than the one previously considered. One should note, however, that the extra aid to Greece was earmarked to face the consequences of the Civil War, and most likely would not have been disbursed in its absence.
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Christodoulakis, N. (2016). The Comparative Economic Cost of Civil Wars. In: An Economic Analysis of Conflicts. Springer, Cham. https://doi.org/10.1007/978-3-319-32261-2_9
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DOI: https://doi.org/10.1007/978-3-319-32261-2_9
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