The Damage Caused by War
A region that experiences protracted conflict will also often suffer from economic underdevelopment, damaged assets, and a reduced capacity to function effectively. Armed conflict retards a country's development process, and also erodes its developmental foundation.
In addition to the huge loss of lives, war leads to material losses, such as destruction of crops and roads, and extensive damage to economic and social infrastructures. Transportation and communication systems, banking, health care, education, and agriculture are often damaged or destroyed.
The economic stress caused by war lessens production capacity and limits the investment capabilities of war-torn regions. During wartime, resources are "diverted from routine maintenance of existing social and economic infrastructure" and into defense. Non-military government spending is often tightened, and there is typically a decline in investments in industrial, agricultural, and construction sectors. These industries, as well as overall trade, tend to decline. Debt often reaches very high levels.
Sarah Peterson describes the process of "social reconstruction" which must parallel physical reconstruction in the "post-conflict" stage.
War can also leads to emigration and displacement, which can reduce the overall size of the labor force.People are killed, or they abandon their homes. This can create significant costs for a country in terms of capital and labor power.
Human resource shortages are also often severe in war-torn societies. Educational opportunities decrease, and access to land can be limited. Indeed, war-induced destruction and poverty can lead to illiteracy, malnutrition, inadequate access to clean water and sanitation facilities, and low school enrollment. Protracted conflict disrupts the routine life of many society members. These burdens may contribute to harsh economic or social conditions, pitting subgroups against each other. In severe cases, it produces social disorder resulting in widespread violence, famine, and flight.
The environmental degradation brought about by war is also extensive. War-related population movements wreak havoc on fragile ecosystems and natural resources are over-exploited to finance the war effort. Land mines may make territory unusable for agriculture. Multiple claims to land and assets arise, and are difficult to resolve in the contentious political environment that typically follows conflict.
Designing Postwar Economic Policy
What can be done to address the enormous economic and social deficits described above? The development of physical and financial infrastructure, as well as investment in human capital and natural resources, are crucial to postwar economic reconstruction.
After armed conflict has come to an end, parties face the difficult task of reestablishing and developing the political, social, and economic structures within society. Indeed, states emerging from armed conflict face the difficult challenge of transitioning from "war-weakened economies and highly polarized political and social relations to rejuvenated economies capable of providing the basic needs of all citizens and political groups that offer all social groups meaningful participation" in decision-making. An essential component of peacebuilding is the rebuilding of economic institutions, government institutions, and communities.
Because the transition from war to peace poses great challenges for economic policy, reforms are often needed to develop the economy, promote equity, and consolidate peace. Economic vitalization efforts, together with reconciliation and demilitarization, are designed to help communities build a prosperous future. Without physical reconstruction and economic revitalization, many war-torn societies are likely to remain handicapped. As a result, reconciliation efforts may suffer, refugees may be unable to repatriate, and the "lack of opportunities for demobilized soldiers may generate new tension." Furthermore, poor economic conditions are often part of what gave rise to armed conflict in the first place. Following war, a failure to achieve broad improvements in living standards can fuel social tensions and heighten the risk of renewed war.Without equitable economic development, peace cannot endure.
A plan for recovery and reconstruction must focus both on immediate needs and long-term development projects. People must have reasonable access to basic needs such as health care, nutrition, education, and housing. Meeting these immediate needs is especially important for young children, pregnant or nursing women, the elderly, and the extremely poor. In addition to extreme poverty, disease and illiteracy are dangerous impediments to sustained economic and political progress.
Therefore, states must strive to rehabilitate basic physical infrastructure, including health and education services, water and sanitation systems, roads, telecommunications facilities and irrigation systems.Rebuilding bridges, marketplaces, and power generation facilities is also crucial to economic revival.
On a more long-term scale, there is a need to establish, or re-establish, basic underpinnings of the economy. Indeed, one of the fundamental requirements for economic growth is a state capable of furnishing public goods and providing a legal framework for investment. This often requires the establishment of new government institutions, including a well-defined system of distributing property, a legal system to enforce property rights, and state infrastructure that can perform necessary economic tasks not fulfilled by markets Such tasks might include building roads and schools, and providing other public goods such as social security and welfare. In many cases, the state must also establish new trade and monetary systems, and stabilize national currency. Banking systems that can provide access to financial services for large segments of the population must be developed.
External aid and domestic resources must be redirected from defense to productive investment. Agriculture, industry, and regional trade must be restored. Individual household economies can often be strengthened by revitalizing the agricultural sector and developing farm exports. Community recovery and development projects are also crucial to the development of local economies
Economic policy should also stimulate investments in human capital.Funds are needed to rebuild the health care system, purchase medical technology, and train medical personnel. Expenditure on primary education and training for the labor force is likewise crucial to economic growth. In addition, refugees and displaced persons must be resettled. New employment opportunities for returning refugees must be developed and ex-combatants must be re-integrated into civilian life. Such opportunities can be generated through vocational and management training, apprenticeships, and small-business assistance.
Countries must also invest in natural capital. Environmental protection policies, including soil conservation measures, reforestation, pest management, and pollution control are crucial to rebuilding war-torn societies.]Such policies can be implemented through state regulation, taxes and subsidies, community management, and sanctions. Other efforts include the implementation of environmental awareness and protection programs, efforts to determine territory and make it usable for agriculture, and wildlife management.
Together, institutional reform, government policy, foreign aid, resource-based development, and environmental and health care development programs can advance recovery. These economic and government institutions must be built gradually, and in a process regarded as legitimate by all parties to the conflict.
Reconstruction, Equity, and Stable Peace
Terrence Lyons talks about the tension between maintaining stability and addressing past injustice in post-conflict reconstruction. He also talks about ways to increase post-conflict stability through gradual democratization and the fostering of civil society.
Many note that issues of political economy are crucial to the success of reconstruction and that interventions that aim at modernization are unlikely to succeed in the absence of political reforms and empowerment efforts. Economic policy during reconstruction must aim to secure not only stabilization and growth, but also equity and stable peace. Such policy must therefore be informed by the peace process and promote equitable distribution of power. In other words, economic policy after war must promote not only economic adjustment, but also political adjustment.
Democratization towards more equitable distributions of power, often furthers the long-term goals of economic growth, fair income distribution, and stable peace. This stability inspires trust in community members, which in turn promotes the resumption of economic activity and encourages business investments.
Indeed, democratization can improve the functioning of both state and market, and is often an integral part of postwar reconstruction. It allows for new institutions that ensure free elections, protect human rights, and carry out justice. These institutions can also intervene to promote more just and successful economic policies, correct financial-market imperfections, and implement agrarian reforms. Democratic institutions also tend to safeguard the property rights of the poor, provide stability to encourage public investment, prevent monopolies from dominating markets, and provide export incentives. Redistributive policies can contribute to inclusive economic growth, which in turn leads to a more equitable distribution of power and political stability. This is crucial for countries emerging from armed conflict.
The Role of the International Community
The international community has come to recognize that parties emerging from armed conflict require assistance not only in negotiating peace agreements, but also in building peace. Indeed, a state's ability to rebuild itself is often limited by weak institutions, scarce human and financial resources, and economic fragility. There is often a "conspicuous lack of efficient permanent institutions and skills" necessary for the complex and urgent project of reconstruction. In some cases, this lack may be alleviated by the more active postwar role played by women's groups, local NGO's, labor unions, and indigenous groups.
However, in many cases, this is not enough. Therefore, nations emerging from war have increasingly turned to outside aid for technical and monetary assistance. If well-planned and coordinated, external assistance can do much to further post-conflict transitions.
There are various development cooperation agencies that attempt to aid postwar reconstruction efforts. For example, the United Nations Development Program, the U.S. Agency for International Development, the World Bank, and the International Monetary Fund all provide international financial assistance to rebuild economic institutions and physical infrastructure.
In addition, development practitioners from various non-governmental bodies and international organizations can assist in strengthening household economies, carrying out infrastructure projects, and initiating community development programs. Outside sources can help to assess damage to economic and social infrastructure and provide technical assistance to implement rehabilitation efforts. Practitioners can aid governments to develop a policy framework within which peacebuilding activities will occur. The international community can also help to revitalize communities' capacities to resolve conflict through nonviolent means, and assist in settling disputes over land and other assets.
To maximize effectiveness of external resources, a division of labor needs to be established between the international development organizations, other members of the international community, and development cooperation agencies. The different parties must work together and collaborate in their reconstruction efforts. Many note that there needs to be a coordinated international commitment to peacebuilding. In addition, donors should take steps to lengthen the time frame for post-conflict peacebuilding activities. And they need to give top priority to building institutional capacity in both the public and civil sectors as early as possible. Together with the governments in question, donors can help to create an environment in which reconstruction and reconciliation are likely to take root.
The Limits of Economic Reconstruction
Rebuilding physical infrastructure and economic institutions is important. However, many have noted that this sort of "mechanical-materialist approach" to reconstruction is incomplete and inadequate insofar as it neglects the dimension of human relationships. Indeed, if postwar reconstruction is to be truly effective, it must also involve reconstructing social structure, culture, and human relationships. Often this means developing an environment that fosters reconciliation, forgiveness, the transformation of relationships, and ultimately peaceful co-existence. Thus, donors should make every effort to ensure that peacebuilding activities enhance national reconciliation.
To accomplish this, the underlying causes of conflict must be addressed. For example, economic development cannot bring peace if the underlying ethnic or political causes of conflict are not resolved. Often this requires addressing past injustice in various ways, such as reparations, war crimes tribunals or truth commissions. It also might involve post-conflict community development programs that focus on post-conflict transformation.