Finance in Conflict and Reconstruction

Journal of International Development 13(7):951-964. (2001) DOI: 10.1002/jid.844

Posted: 28 Oct 2014

See all articles by Tony Addison

Tony Addison

United Nations University

Philippe Le Billon

University of British Columbia (UBC) - Department of Geography; University of British Columbia (UBC) - Liu Institute for Global Issues

Syed Mansoob Murshed

Institute of Social Studies (ISS)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2001

Abstract

The relationship between an economy's financial sector and the occurrence and resolution of conflict may at first sight appear tenuous. Banking systems, financial regulation, and currency arrangements do not appear to be relevant in understanding why nations collapse or why people kill each other. However, the linkages between the financial sector and issues of conflict are closer than one might expect. Narrow development-development that fails to reduce poverty and which exacerbates initial inequalities-is an important cause of conflict (but, needless to say, not the only one). Narrow development must be financed-and it is financed in ways that increase poverty and inequality and raise a society's propensity to violent conflict. During conflict, finance (both internal and external) can be decisive in determining who wins, as well as the duration of war. Rebuilding the financial system is important to reconstruction from war, since otherwise private investment is constrained. But 'post-conflict' economies generally have weak regulatory authorities, and the financial system may be flooded with unsound loans, leading to economic problems that can endanger economic recovery and therefore peace.

Suggested Citation

Addison, Tony and Le Billon, Philippe and Murshed, Syed Mansoob, Finance in Conflict and Reconstruction (February 2001). Journal of International Development 13(7):951-964. (2001) DOI: 10.1002/jid.844 , Available at SSRN: https://ssrn.com/abstract=2515261

Tony Addison (Contact Author)

United Nations University ( email )

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Philippe Le Billon

University of British Columbia (UBC) - Department of Geography ( email )

Canada

University of British Columbia (UBC) - Liu Institute for Global Issues

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Syed Mansoob Murshed

Institute of Social Studies (ISS) ( email )

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