Appendix: Impact of Wars on Selected Countries1
Addison, Tony, Abdur R. Chowdhury, and S. Mansoob Murshed, 2002, “By How Much Does Conflict Reduce Financial Development?” WIDER Discussion Paper No. 2002/48 (Helsinki: World Institute for Development Economic Research, United Nations University).
Ades, Alberto, and Hak B. Chua, 1997, “Thy Neighbor’s Curse: Regional Instability and Economic Growth,” Journal of Economic Growth, Vol. 2 (September), pp. 279–304.
Bennett, D. Scott and Alan C. Stam III, 1996, “The Duration of Interstate Wars, 1816–1985,” American Political Science Review, Vol. 90, No. 2, pp. 239–57.
Caselli, Francesco, 2008, “Growth Accounting,” The New Palgrave Dictionary of Economics, London: Palgrave MacMillan: Second Edition, edited by Steven N. Durlauf and Lawrence E. Blume.
Chalk, and others, 1997, Kuwait: From Reconstruction to Accumulation for Future Generations, IMF Occasional Paper No. 150 (Washington: International Monetary Fund).
Collier, Paul, 1999, “On the Economic Consequences of Civil War,” Oxford Economic Papers 51, pp. 168–83, Oxford University Press.
Collier, Paul and Anke Hoeffler, 1998, “On the Economic Causes of Civil War,” Oxford Economic Paper, Vol. 50, No. 4, pp. 563–73.
Collier, Paul, Anke Hoeffler, and Mans Soderbom, 2004, “On the Duration of Civil War,” Journal of Peace Research, Vol. 41, No. 3, 2004, pp. 253–73.
De Groot, Olaf J., 2010, The Spillover Effects of Conflict on Economic Growth in Neighboring Countries in Africa,” Defence and Peace Economics, 2010, Vol 2, No. 2 (April), pp. 149–64.
Eken, Sena, and others, 1995, Economic Dislocation and Recovery in Lebanon, IMF Occasional Paper No. 120 (Washington: International Monetary Fund).
Eken, Sena, and Thomas Helbling, 1999, Back to the Future: Postwar Reconstruction and Stabilization in Lebanon, IMF Occasional Paper No. 176 (Washington: International Monetary Fund).
Gupta, Sanjeev, and others, 2002, “Fiscal Consequences of Armed Conflict and Terrorism in Low- and Middle-Income Countries,” IMF Working Paper 02/142 (Washington: International Monetary Fund).
International Monetary Fund, 2003a, Jordan—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, June 19, 2003.
International Monetary Fund, 2004, Iraq—Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, September 24, 2004.
International Monetary Fund, 2005, IMF Executive Board Concludes 2005 Article IV Consultation, Post-Program Monitoring Discussions, and Ex Post Assessment with Jordan, Public Information Notice (PIN) No. 06/02, January 5, 2006.
Library of Congress, 1993, “Reconstruction After the Persian Gulf War,” http://countrystudies.us/persian-gulf-states/33.htm.
Sdralevich and others, 2013, Iraq: 2013 Article IV Consultation, IMF Staff Country Report No. 13/217 (Washington: International Monetary Fund).
United Nations High Commissioner for Refugees, July 2009, Surviving in the city: A review of UNHCR’s operation for Iraqi refugees in urban areas of Jordan, Lebanon and Syria, PDES/2009/03.
The author is grateful to Adnan Mazarei, May Khamis, Annalisa Fedelino, Andrea Gamba, Peter Gruskin, Kristina Kostial, Alina Luca, Edouard Martin, Eric Mottu, Najla Nakhle, Francisco Parodi, Carlo Sdralevich, Younes Zouhar, for their useful comments; Kamal Krishna for research support; and Cecilia Pineda for administrative support.
While the 2003 invasion of Iraq lasted few weeks, Iraq was essentially in low-grade civil war throughout much of the last decade until the summer/fall of 2009.
Furthermore, an econometric analysis of the cases at hand would have been precluded by limited data availability and comparability. For a well-known empirical analysis of economic causes of civil wars, see Collier and Hoeffler (1998).
Collier and others (2004) found that civil wars lasted on average seven years. They also found that low per capita GDP, high inequality, and ethnic divisions could lengthen conflicts. On the other hand, according to Bennett and Stam (1996) international wars lasted for about 11 months.
According to the Economist Intelligence Unit (EIU, 2003), the official value of the Iraqi dinar remained fixed since 1982, but there was a black market rate which showed no relation to its black-market rate.
Salti (2012) notes that persistent political instability in Lebanon continued to create a significant output cost for the country several years after the war ended.
In 1992 and 1993, the non-oil sector growth was weak in Kuwait. This reflected mainly three factors: (i) a population policy aimed to reach a balance between Kuwaitis and expatriates led to a decline in the population, which constrained domestic demand, capacity utilization, and the availability of skilled labor; (ii) few opportunities for private sector investment; and (iii) uncertainties about the resolution of problem loans held by banks.
In both 2005 and 2006 in Iraq, the source of growth was from non-oil economic activity. The lack of progress in increasing oil output reflected a combination of low investment (with project implementation impeded, by violence), and technical problems with the existing infrastructure at that time.
According to government estimates, the figure of refugees from Iraq stood at 450,000 in Jordan, 50,000 in Lebanon and 1.1 million in Syria. But the number of refugees registered with United Nations High Commissioner for Refugees (UNHCR) was considerably smaller: around 52,000 in Jordan, 10,000 in Lebanon, and 206,000 in Syria at the end of March 2009. Because the Iraq-Syria border remained largely open, and because there was considerable movement across that border, it is difficult to determine exactly how many Iraqis resided in Syria. Moreover, many of the Iraqi refugees were well educated, had good jobs, and lived a reasonably comfortable lifestyle (UNHCR, 2009).
There were other incidents of conflicts or unrest in Lebanon that are not the scope of this study.
Government reserves are held in the Reserve Fund for Future Generations (RFFG) managed by the Kuwait Investment Authority and, therefore, are not recorded in gross international reserves.
The debt Kuwait incurred to coalition allies to finance Desert Storm and continuing military expenditures were among the largest post-war spending the government had (Library of Congress, 1993).
Since 1975, the Jordan dinar was pegged officially to the SDR, but in practice it had been pegged to the dollar since late 1995. The dinar came under increasing pressure in 1988, and it was allowed to float in October 1988. In late May 1989, the dinar was pegged to the SDR. Following the start of the regional crisis, a parallel market rate emerged, which in November 1990 was nearly 10 percent more depreciated than the official rate. The parallel rate disappeared shortly following the end of the crisis.
Debt numbers for Iraq were unavailable prior or during the war. It was, however, estimated that total public debt amounted to about 335 percent of GDP in 2004.
However, from November 2006 until end-2008, the CBI allowed the exchange rate to gradually appreciate. As a result, the exchange rate arrangement of Iraq was reclassified to the category of crawling peg effective November 1, 2006. Since the start of 2009, the CBI returned to its earlier policy of maintaining a stable dinar. Consequently, the exchange rate arrangement of Iraq was reclassified effective January 1, 2009 as a stabilized arrangement.