The Economics Of Peace

The Economics Of Peace

Last year I came across the work of the Institute for Economics and Peace (IEP), an independent, not for profit research organisation dedicated to understanding the intersection between peace, prosperity and the economy. The organisation is behind the Global Peace Index, an instrument ranking 163 countries on their respective levels of peacefulness.

Based on my interest in the subject I learnt more about the IEP's work through their online teaching and subsequently applied for their 2019 IEP Ambassador programme. This post will provide a summary of the key points of my learning.

Established in 2009 the IEP has offices in Australia, the United States, Mexico, Belgium, Zimbabwe and the Netherlands and one of it's main goals is to create a shift in how the world thinks of peace, through using data driven research to show that peace is a tangible measure of human well-being and development. Society currently tends to think of progress in terms of economic growth, typically reflected by Gross Domestic Product (GDP) but there is an increasing recognition of the need to view societal development, including measures of well-being and peace as benchmarks of progress. Although not related the idea reminds me of the country Bhutan who do not measure GDP but instead Gross National Happiness.

Yet whilst the IEP recognises the emergence of these new needs it does not neglect the importance of the economic and financial benefits of reductions in violence and improvements in peacefulness because that is a key way to motivate government, business, and the public. Promoting the economic benefits of peace is significant as without it, peace could be dismissed as a nice to have; although with economic benefit peace becomes a win win.

The basis of this work comes from the father of peace studies Johan Galtung who defined the concepts of peace used in the IEP's research: negative and positive peace. Negative peace is the 'absence of violence' or 'absence of fear of violence' such as when a ceasefire is signed. Positive peace is is the attitudes, institutions and structures that create and sustain peaceful societies. Examples of this are well functioning governments, equitable distribution of resources, free flow of information, good relations with neighbours, high levels of human capital, acceptance of the rights of others, low levels of corruption and a sound business environment. When levels are high in these areas an optimum environment is created for peace to flourish.

These areas are some of the 23 qualititaive and quantitative indicators used by the Global Peace Index to rank 163 countries on their respective levels of peacefulness. The indicators fall into three general categories: societal safety, ongoing domestic and international conflict and militarization and are weighed on a 1-5 scale.

The detail which goes into the Global Peace Index is very detailed and produces a plethora of data for analysis. It is not my intention to go into vast detail within this post as interested parties can access the full report online but I will outline the top-level highlights from 2019:

• For the first time in five years the average level of country peacefulness has improved (by 0.09% from the previous year), with 86 countries becoming more peaceful and 76 deteriorating.
• Iceland remains the most peaceful country and Afghanistan has replaced Syria as the least peaceful.
• Ukraine, Sudan, Egypt, North Macedonia and Rwanda are the countries which showed the greatest improvement in measures of peacefulness.
• Nicaragua, Birkina Faso, Zimbabwe, Iran and Brazil showed the largest deteriorations.

Furthermore over the past decade the following trends have been identified:

• Since 2008 the average level of peacefulness has declined by 3.78%.
• Over the course of the decade, 81 countries deteriorated in peacefulness, while 81 improved.
• Deaths from conflict rose by 140% since 2008 however since 2014 conflict related deaths have fallen by 26.5%.
• 63% of countries recorded increased levels of terrorist activity.
• The Militarization domain recorded a 2.6% improvement in peacefulness.
• A continuing trend indicates a growing gap between the least and most peaceful countries.

Further to the ranking of countries' respective levels of peacefulness, one of the most notable results from the Global Peace Index 2019 is the economic data:

• The global impact of violence in 2018 was $14.1 trillion, equivalent to 11.2% of overall global GDP.
• In the last 70 years, per capita GDP growth has been nearly three times higher in highly peaceful countries compared to those with low levels of peace.

Overall the strong link between positive peace and economic prosperity highlights both the social and economic benefits of peace. Unfortunately the decline in peacefulness and rise in terrorism within the last decade indicates that the world has not yet been able to apply these lessons. There is also an alarming inequality between countries with high and low levels of peace which is growing. Being able to understand the factors which contribute towards peace and the costs involved is an exciting area of work which should encourage the world to shift it's resources and strategies from containing violence towards the factors that promote peace. The IEP calculate that "if the world decreased violence by 10%, $1.48 trillion could be directed to other economic activities" - there is incredible scope to solve many of the world's problems with the savings of a more peaceful world.

The IEP Ambassador programme has been an interesting experience and I look forward to following the findings of the Global Peace Index and sharing my learning further in future years.

More information about the Institute for Economics & Peace can be found on their website: visionofhumanity.org.