Post-Conflict Recovery: Institutions, Aid, or Luck?

By Antonio David, Fabiano Rodrigues Rodrigues Bastos, Marshall Mills

June 1, 2011

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Antonio David, Fabiano Rodrigues Rodrigues Bastos, and Marshall Mills. Post-Conflict Recovery: Institutions, Aid, or Luck?, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper identifies the factors linked to cross-country differentials in growth performance in the aftermath of social conflict for 30 sub-Saharan African countries using panel data techniques. Our results show that changes in the terms of trade are the most important correlate of economic performance in post-conflict environments. This variable is typically associated with an increase in the marginal probability of positive economic performance by about 30 percent. Institutional quality emerges as the second most important factor. Foreign aid is shown to have very limited ability to explain differentials in growth performance, and other policy variables such as trade openness are not found to have a statistically significant effect. The results suggest that exogenous factors ("luck") are an important factor in post-conflict recovery. They also highlight the importance in post-conflict settings of policies to mitigate the macroeconomic impact of terms of trade volatility (including countercyclical macroeconomic policies and innovative financing instruments) and of policies to promote export diversification.

Subject: Econometric analysis, Estimation techniques, Financial services, Foreign aid, Human capital, International trade, Labor, Real interest rates, Terms of trade

Keywords: Conflict, Conflict country, Country policy, Economic growth, Estimation techniques, Executive constraints variable, Human capital, Real interest rates, Sub-Saharan Africa, Terms of trade, Terms of trade movement, Terms of trade shock, Terms of trade variable, Terms of trade volatility, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/149
Stock No:

WPIEA2011149
ISBN:

9781455269471
ISSN:

1018-5941

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