Figure 3.4 Episodes of war

G L O B A L P R O D U C T I V I T Y C H A P T E R 3 161

FIGURE 3.4 Episodes of war

Intrastate conflicts were the most frequent type of wars over the full sample. The frequency of war episodes in total dropped after 2000. Since 2000, there were almost 70 percent fewer intrastate and 25 percent fewer external (extra- and interstate) war episodes per year compared to the 1980s and 1990s. A typical LIC was twice as likely to be hit by a war as a typical EMDE (including LICs) and 10 percent more likely than an advanced economy after 2000. Intrastate conflicts mainly occurred in SSA, whereas external wars mainly occurred in EAP and MNA. The frequency of wars dropped in all regions in 2000-18 relative to 1980-99.

A. Average number of war episodes per year, by type B. Average number of war episodes per country per year

C. Share of war episodes, by region, 1960-2018 D. Average number of war episodes per year, by region

Sources: Correlates of War (COW); Peace Research Institute Oslo (PRIO); World Bank. Note: Wars include intrastate and external (interstate and extrastate) wars (COW and PRIO; annex 3A). An episode dummy for a specific type of event is 1 if the event occurs at least once (≥1) in a country-year pair and 0 otherwise. The sample includes 170 economies: 35 advanced economies and 135 EMDEs, of which 27 are LICs. EMDEs = emerging market and developing economies; LICs = low-income countries; EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MNA = Middle East and North Africa; SAR = South Asia; SSA = Sub-Saharan Africa.

Wars in advanced economies have been accompanied by weaker productivity growth. In advanced economies, the number of wars tripled while labor productivity and TFP growth halved from 1960-89 to 1990-2018. These associations appear weak in EMDEs and LICs (figure 3.5).

Financial crises

Financial crises sharply raise borrowing costs and worsen balance sheets. They have often led to severe economic contractions, with lasting corrosive effects on productivity levels