Economy is the lifeblood of the entire world and can be impacted by sociopolitical and security situations, especially in troubled time and violence, bringing about economic consequences. The interdisciplinary theme on ECONOMIC VALUE OF PEACE: MEASURING THE GLOBAL ECONOMIC IMPACT OF VIOLENCE AND CONFLICT published by the Institute for Peace and Economics (IEP) is further discussed. The said report provides a detailed research study on the economic effects of violence. The researchers highlighted the direct and indirect effects of violence and terrorism – albeit unmeasurable – in the global economy, the economies of major countries, and emerging economies.​

The research study measures an individual’s average daily income, with a spate of conflicts and terrorist acts coming into play across the world. It also monitors the change trajectory into better situations as the countries affected by violence gradually establish internal peace and stability.

The researchers draw attention to the significant difference between the Gross Domestic Product (GDP) of each of the ten countries most affected by global violence (Syria, Afghanistan, South Sudan, Central African Republic, Somalia, North Korea, Cyprus, Iraq, Venezuela, and Sudan), and the GDP in the ten most peaceful countries (Iceland, New Zealand, Portugal, Austria, Denmark, Canada, Singapore, Czech Republic, Japan, and Switzerland). It has been observed that the per capita share is very low in the impacted countries, while the per capita share is fairly high in the most fortunate countries.

Given the increase of the ISIS influence in the Middle East, the highest rates of economic cost of violence were recorded in 2017. The research study points out that the deterioration of economic conditions globally fueled by violence and the increase in military spending annually in some countries are yoked together, especially the major economies, such as India, China, and the United States of America. Of great note, measuring the economic effects of violence is directly related to the spending of each country on internal national security, and the increase in individual violent incidents and suicides.

The research study also highlights a significant decrease in the rates of negative economic effects of violence in 2019, vis-à-vis the 2012-2017 period, which is a five-year lifespan that sustained the outbreak of armed conflict in Syria, Libya, Yemen and other regions in the Middle East. Violence incidents decreased in 2019, and terrorism decreased in many regions of the world, most notably in the Middle East and South Asia.

The researchers reveal that the phenomenon of violence and armed conflicts greatly contributes to limiting or undermining all efforts aimed at establishing peace in many countries. However, it is agreed that any significant improvement in the peace index in general is directly reflected in the global economic conditions.

The research study emphasizes that democratic regimes recorded lower rates of negative economic effects resulting from violence, in view of the GDP, while authoritarian regimes recorded a glaring rise in the negative economic effects, which means a decrease in an individual’s average daily income. To this effect, three important topics are highlighted:

The report, alternatively referred to here as research study, indicates the close relationship between the magnitude of the negative effects of violence and the ability to control the aspects related to the violent acts, in terms of the efforts made by states to undermine terrorist capabilities and reduce violent acts that lead to an increase in the expenditures involved in associated injuries, which negatively affects the global economy and creates inequality among individuals.

The researchers define the economic effects of violence as the expenditures made in confronting the consequences of terrorism and violent acts and preventing or limiting such acts. They include the deterioration of economic and humanitarian conditions, the spread of chaos, and the low standard of living. Taken together, this is an inevitable result of the low level and decline of production. This translates into a complete collapse of public infrastructure, government facilities, and private property, especially if war is sparked off by violence; the devastating effects drag on for many years, causing a run of injuries that are difficult to recover from.

In a similar vein, the researchers emphasize the results of the research study do not include all common manifestations of violence; it aims to measure the effects of specific types of violence, such as individual killings, and monitoring the indicators associated with each case. Had the study included the effects of all typologies of violence across the world, the results issued would have been much greater.

Equally important, the research study also monitors the economic effects resulting from the expected cases of violence, not only the actual ones. If a given country is on the verge of slipping into violent acts, for instance, it will unquestionably revisit its economic situations. Most likely, such a country will direct a greater part of its financial potential towards military spending. The fear of possible violence in the future casts a negative shadow on the economic, social, psychological, and all infrastructures, especially the health infrastructure of such a country.

Simply put, once an upcoming danger creeps in, it will cause a loss of balance and confusion in all state institutions. Practically, the matter is related to the extensive experience of countries and peoples in grappling with violence. The greater the social, political, and security experience is in clamping down on violence, the more the psychological effects and the societal infrastructure of violence will be controlled.

What is the price that the global economy pays because of the occurrence and ubiquity of violent events? This is a critically important and leading question. The report reveals that the size of the economic effects of violence globally in 2019 was estimated at $14.4 trillion according to the purchasing power parity measure, which evaluates the purchasing power of different currencies in the world, given the components of the food basket in each. This figure is equal to 10.5% of global GDP, at $1,895 per capita.

The researchers observe a decrease in this percentage in the last two years, by $64 billion (0.4%) of global GDP. The main reason is the low rates of armed conflict in the world, especially in the Middle East. The research study divides the economic effects, or material losses, resulting from violence into three categories:

Direct costs are the cost of violence to the victim, the perpetrator, and some sectors, such as policing, military and medical expenses. Indirect costs accrue after the violent event and include indirect economic losses, physical and psychological trauma to the victim and lost productivity. The multiplier effect represents the flow-on effects of direct costs, such as the additional economic benefits that would come from investment in business development or education, instead of the less productive costs of containing or dealing with violence. The researchers divide the effects of armed violence into five main sectors:

The research study provides important indicators for measuring the size of the economic effects of violence, such as military spending, and death toll. However, other important indicators were not included to measure the real progress: (1) internal security and peace; (2) levels of militarization (mobilization of armed fighting groups) within the state; (3) ongoing conflict.

At the regional level, the effects of violence showed a remarkable improvement in 2019 in four regions of the world: The Middle East, which recorded the highest improvement since 2018 at 6.9% (Iraq was one of the countries that recorded the most decline), South Asia, Southeast Asia, and Russia. The researchers recorded the great discrepancy in the nature of the context associated with violent incidents between one region and another. For example, in the Middle East, armed conflicts had the greatest impact, while other regions were very much affected by acts of individual violence of both intentional psychological trauma, physical and sexual violence, as in Central America, South America, and the Caribbean.

As per the GPI (2020), Central America, South America and the Caribbean sustained a significant increase in the size of the deterioration in public peace given the high death toll fueled by violent acts, according to the annual report issued by the Political Terrorism Barometer. The researchers show the great similarity in the nature of the contexts associated with violent acts in both regions, emphasizing that the acts of individual violence and murders were notoriously most rampant; therefore, the high indicators of deterioration at both the economic and social levels are attributed to the same reasons in the two regions.

A special focus is attached to South America and the Caribbean; they include eight of the ten countries that suffer the highest economic losses from high homicide rates, given their GDPs, and the ubiquity of drug trafficking organizations there. According to the annual report issued by the American Gallup Corporation with regard to the index of global law and order, the citizens of the said countries are the least secure and the most that lack confidence in the ability of their governments and security apparatuses. The said countries ranked in order according to the highest rise in both GDP and GNP per capita indicators are El Salvador, Jamaica, Venezuela, Honduras, Trinidad & Tobago, Brazil, Guatemala, Colombia, Mexico, and Guyana.

Although the Middle East and North Africa (MENA) has made progress in reducing the economic cost of violent acts, it is still, as reported by the GPI, the least secure and peaceful region. Six of the fifteen countries across the world were ranked as the most impacted by the effects of violence: Syria, Iraq, Yemen, Sudan, Libya and the occupied Palestinian territories. Syria tops the list given the continued armed conflicts, high deaths, injuries, refugees and IDPs, especially between 2011 and 2017. In the same vein, there are several countries that enjoy the highest levels of security and stability in the Middle East: Kuwait, Qatar, and the United Arab Emirates. In this context, it should be noted that there are many countries that have enjoyed security and stability in the Middle East, including the Sultanate of Oman, the Hashemite Kingdom of Jordan, and the Kingdom of Saudi Arabia, which has a record of zero terrorist incidents in the previous years, with the exception of Houthi attacks, using drones and ballistic missiles.