Infrastructure in Conflict-Prone and Fragile Environments: Evidence from the Democratic Republic of Congo

58 Pages Posted: 20 Apr 2016

See all articles by Rubaba Ali

Rubaba Ali

World Bank; University of Maryland

Alvaro Federico Barra

World Bank

Claudia N. Berg

International Monetary Fund (IMF)

Richard Damania

World Bank; University of Adelaide - School of Economics

John D. Nash

World Bank

Jason Russ

World Bank; George Washington University

Date Written: May 18, 2015

Abstract

In conflict-prone situations, access to markets is necessary to restore economic growth and generate the preconditions for peace and reconstruction. Hence, the rehabilitation of damaged transport infrastructure has emerged as an overarching investment priority among donors and governments. This paper brings together two distinct strands of literature on the effects of conflict on welfare and on the economic impact of transport infrastructure. The theoretical model explores how transport infrastructure affects conflict incidence and welfare when selection into rebel groups is endogenous. The implications of the model are tested with data from the Democratic Republic of Congo. The analysis addresses the problems of the endogeneity of transport costs and conflict using a novel set of instrumental variables. For transport costs, a new instrument is developed, the "natural-historical path," which measures the most efficient travel route to a market, taking into account topography, land cover, and historical caravan routes. Recognizing the imprecision in measuring the geographic impacts of conflict, the analysis develops a spatial kernel density function to proxy for the incidence of conflict. To account for its endogeneity, it is instrumented with ethnic fractionalization and distance to the eastern border. A variety of indicators of well-being are used: a wealth index, a poverty index, and local gross domestic product. The results suggest that, in most situations, reducing transport costs has the expected beneficial impacts on all the measures of welfare. However, when there is intense conflict, improvements in infrastructure may not have the anticipated benefits. The results suggest the need for more nuanced strategies that take into account varying circumstances and consider actions that jointly target governance with construction activities.

Keywords: Economic Growth, Economic Theory & Research, Conflict and Fragile States, Industrial Economics, Inequality

Suggested Citation

Ali, Rubaba and Barra, Alvaro Federico and Berg, Claudia N. and Damania, Richard and Nash, John D. and Russ, Jason, Infrastructure in Conflict-Prone and Fragile Environments: Evidence from the Democratic Republic of Congo (May 18, 2015). World Bank Policy Research Working Paper No. 7273, Available at SSRN: https://ssrn.com/abstract=2607773

Rubaba Ali (Contact Author)

World Bank ( email )

1818 H Street, NW
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University of Maryland ( email )

College Park
College Park, MD 20742
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Alvaro Federico Barra

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Claudia N. Berg

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Richard Damania

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

John D. Nash

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Jason Russ

World Bank

1818 H Street, NW
Washington, DC 20433
United States

George Washington University

2121 I Street NW
Washington, DC 20052
United States

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