PEACE

South Asia
The economic impact of violence in South Asia increased
five per cent in 2015, mainly rising due to the conflict
in Afghanistan and Pakistan with the Taliban and other
militant groups. Sri Lanka was the only country in the
region to reduce the economic impact of violence, due to
its improvement in peacefulness and emergence from the
civil war. Figure 10 shows changes in the economic impact
of violence between 2007 and 2015 in South Asia.
The economic impact of violence has tripled in
Afghanistan over the last nine years. The country has
particularly struggled to contain violence since the
drawdown of the international troops starting from 2011.
The economic impact of deaths from internal conflict
doubled in 2015 and has increased 592 per cent since
2007. Similarly, military spending has increased 11 times
and internal security spending has increased three fold,
predominantly funded by foreign aid from international
community which amounted to US$5.35 billion in 2015. 19
In Nepal, the security-heavy response to protests,
involving the military for the first time since the civil war,
has led to an almost 50 per cent increase in the economic
impact of violence over the period from 2007 to 2015.
Pakistan has experienced a smaller but still notable 11
per cent increase in the economic impact of violence in
2015. The rise in the cost of violence is driven by increased
internal battle deaths, a rising number of refugees and
IDPs and increased military spending in 2015. Conflictrelated
causalities are the result of military operations that
took place after the peace negotiations between militant
groups and the government failed in 2014.
The economic impact of violence has also increased
five per cent in India, mainly driven by an increase
in military spending. It is also important to note the
continued incidents of crossfire on the India-Pakistan
border resulting in military and civilian casualties which
contribute to negative impacts on the economic model.
The cost of external battle deaths increased from $44
to $100 million PPP, or an increase of 124 per cent in
2015. The border disputes with Pakistan in the Kashmir
region and the exchange of fire are the primary reason for
increased external conflict deaths.
In contrast, Sri Lanka has recorded the largest decline
in the economic impact of violence in the world since
2007, decreasing by 42 per cent. The economic impact of
violence peaked in 2009 during the civil war between the
Sri Lankan government and the militant group LTTE. The
economic impact of violence has decreased 66 per cent
since 2009 resulting in a peace dividend of $48 billion
PPP which is equivalent to 20 per cent of the country’s
2015 GDP.
FIGURE 10 PERCENTAGE CHANGE IN THE ECONOMIC IMPACT OF
VIOLENCE IN SOUTH ASIA, 2007 TO 2015
Sri Lanka and Bangladesh achieved a peace dividend of $17 billion
and $4 billion PPP respectively.
Sri Lanka
Bangladesh
Bhutan
India
Pakistan
Nepal
Afghanistan
-100% -50% 0% 50% 100% 150% 200% 250%
PERCENTAGE CHANGE, 2007 TO 2015
Source: IEP
THE ECONOMIC VALUE OF PEACE 2016 | Results & Trends 18