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Authors: Lavinia Piemontese, Mathieu Couttenier, Nathalie Monnet

 

 

Abstract: We investigate the Maoist insurgency in Eastern India in 2000-2009 to develop a novel approach for estimating the economic costs of conflict. In this approach, the production network serves as a primary mechanism through which the disruptive effects of localized conflict spread to peaceful areas. By applying a model of production networks, we aim to quantify the overall impact of conflict, taking network propagation into account. Our key finding reveals that, regardless of the degree of conflict-induced distortion experienced by firms in conflict-affected areas, 73% of the total output loss can be attributed to network propagation.

 

Jel Classification: D22, D74, O12, O47

Keywords: Conflict, Firms, Production Network, Aggregate Output Loss

 

Full Text: The Economic Costs of Conflict: A Production Network Approach