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Beyond guns and butter

Beyond guns and butter
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First Published: Tue, Mar 23 2010. 08 35 PM IST

Photograph: Mohammad Shoab / Reuters
Photograph: Mohammad Shoab / Reuters
Updated: Tue, Mar 23 2010. 08 35 PM IST
South Asia is the second most violent place on earth after Iraq. While conflicts in Afghanistan and Pakistan have attracted global attention, parts of India, Sri Lanka and Nepal have also experienced long-running conflicts. The result is human misery, destruction of infrastructure and social cohesion, and death.
The relationships between conflict, income and poverty are much more complex than is commonly supposed. High income does not guarantee peace and stability. The relationship between conflict and per capita income is not very tight—there are many countries that are outliers. What is even more striking is that these outliers are concentrated in South Asia. Most South Asian countries (except for Bangladesh) have much higher conflict rates for their stage of development.
Photograph: Mohammad Shoab / Reuters
If it is conflict which holds back development, then policymakers should focus on controlling conflict, that is, increase military and police interventions to reduce conflict. But if it is low income and high poverty which cause conflict, then the focus should be on direct policy interventions to reduce poverty and human misery. In India, there is evidence that states that had higher incomes and fewer police had less violence than the ones that had more police and less income. There is also some evidence that horizontal inequalities (inequality between identity groups) can be a factor in causing conflict. This suggests that it is not enough just to have “development” but it must be shared fairly across groups.
Given the inverse association between conflict and per capita income, we would expect that conflict rates should be much higher in lagging regions within countries—that is, regions that have lower per capita income compared with national average. Indeed, this is exactly what we find.
In India, Bangladesh, Nepal, Pakistan and Sri Lanka, conflict is concentrated in the lagging regions. Conflict rates are higher in the lagging regions of Pakistan (Baluchistan, Federally Administered Tribal Areas and North-West Frontier Province), India (Maoist insurgency in Bihar, Chhattisgarh, Jharkhand and Orissa), Sri Lanka (north) and Nepal. Lagging regions have experienced more than three times the number of terrorist incidents per capita, compared with leading regions, and almost twice as many deaths per head of population in such incidents.
Conflicts can be triggered by low economic growth which leads to a lower economic opportunity cost of rebellion against the state in poor areas. Low economic growth in certain areas can be the result of unequal distribution in gains from development or political marginalization. A second trigger for conflicts is a natural disaster. The lagging regions of South Asia suffer from both. The consequences of conflict on development are more severe in lagging regions because they have weak institutions, poor geography and are poorly integrated with global markets. These are also the characteristics that limit economic growth in lagging regions.
Leading regions also suffer from conflict and poverty in South Asia, but they have managed them better because of rapid economic growth, job creation and better safety net programmes.
Reducing conflict is a prerequisite for political stability which, in turn, is the prerequisite for implementing pro-growth policies.
The most common approach to deal with insurgencies, terrorism or internal violence is to use the police to establish law and order in the affected areas. In cases where police force is insufficient, the armed forces are called in to deal with the insurgency. In most cases, this has not been a successful strategy. Even when these are successful in defeating the insurgents, as in Sri Lanka, the human cost associated with military operations is very high.
A different approach to dealing with insurgencies is to conduct negotiations and sign peace agreements with the insurgents. This approach has been tried in some areas of South Asia. For instance, the Indian government has signed peace deals with several separatist groups in the north-eastern states, granting them a higher degree of local autonomy in some cases.
At the same time as the security-based solution, there are economic solutions. These involve the government expanding welfare programmes to reduce poverty in the conflict-affected areas as a means to undercutting the support for the insurgency. This has been tried in some conflicts in South Asia, but it has failed because of poor choices of economic policies and poor implementation in conflict regions.
Policy choices and their implementation are critical in preventing an escalation of conflict and in post-conflict reconstruction. Economic policies should be geared not just to maximize growth, but also to address the distributional or political factors that led to the conflict.
Cross-border cooperation between countries should be an integral part of any strategy to reduce conflict. Many of the internal conflicts in South Asia have cross-border dimensions. Going forward, regional cooperation initiatives, which have so far been underused, are likely to be important in countering terrorism. South Asian governments have taken a variety of approaches to fight terrorism. The challenge is to balance these different approaches towards countering conflict, as well as the optimal economic policies to be adopted in post-conflict environments.
Edited excerpts. Printed with permission from VoxEU.org. Ejaz Ghani is economic adviser at the World Bank and Lakshmi Iyer is an assistant professor at Harvard Business School. The views expressed here are personal and not those of the World Bank. Comment at theirview@livemint.com
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First Published: Tue, Mar 23 2010. 08 35 PM IST
More Topics: Poverty | Terrorism | South Asia | Views | TheirView |