PEACE

Homicide, at 13 per cent, is the third largest category. The
economic impact of homicide in 2015 was approximately
$1.79 trillion PPP. Direct costs of homicide and violent
crime include medical costs, lost earnings and damages
to the victim and the perpetrator. Indirect costs include
lost productivity of the victim, family and friends due to
psychological trauma.
Economic costs arising from intentional homicides are
greater than the costs of any other category of crime or
conflict. The model accounts for the costs related to the
victim and perpetrators of crime. The indirect costs of
homicide are extremely high, as victims of homicide can
have no positive influence on productivity, unlike other
crimes where the victim may be able to contribute to the
economy after recovery; therefore their lifetime earnings
are a loss to the economy. Reflecting this, the economic
impact of violent and sexual assault is three times less
than the impact of homicide. In 2015 violent and sexual
crimes accounted for $545 billion PPP or four per cent of
the global economic impact of violence.
Figure 3 highlights the composition of the total economic
impact of violence for 2015, broken out by indicator across
four categories: military, internal security, interpersonal
violence, and conflict. Government expenditure on both
the military and domestic security account for over 70 per
cent of the total economic impact of violence.
As would be expected, more peaceful countries have a
lower economic impact of violence as a percentage of
GDP. However, this relationship is not linear. As the
level of peacefulness decreases, costs associated with
violence increase exponentially, particularly in situations
of protracted conflict, which both increase the cost of
violence and shrink the total amount of economic activity.
This relationship is shown in figure 4.
The non-linear nature of correlation between the
economic impact of violence and peacefulness also
shows the economic resilience of developed economies.
While the unit cost of most types of violence is higher in
developed economies, they do not suffer as many long
term consequences of violence as developing countries.
Developed and diversified economies can more efficiently
reallocate labour and capital from sectors affected by
violence to other sectors. By contrast, smaller developing
economies lack such diversification and violence cause
more economic disruptions. One study on the impact
of terrorism on growth in Asian economies showed that
economic growth fell by 1.4 per cent for each incident
of transnational terrorism per million people in smaller
developing economies, with no such growth implication of
terrorism in developed economies. 10
FIGURE 3: DETAILED COMPOSITION OF GLOBAL VIOLENCE CONTAINMENT, 2015
The majority of expenditure for violence containment is for the military and internal security.
Military
Internal Security
Interpersonal
Violence
Conflict
GDP losses
Military (excluding US)
Homicide
Domestic security
Refugees
and IDPs
US military related
Private security
Violent and
sexual assault
Fear
Terrorism
Internal
conflict
UN Peacekeeping
Peacebuilding
Small arms
External conflict
Source: IEP
THE ECONOMIC VALUE OF PEACE 2016 | Results & Trends 10