Economic Growth, Civil Wars, and Spatial Spillovers

A neoclassical growth model is used to empirically test for the influences of a civil war on steady-state income per capita both at home and in neighboring countries. This model provides the basis for measuring long-run and short-run effects of civil wars on income per capita growth in the host country and its neighbors. Evidence of significant collateral damage on economic growth in neighboring nations is uncovered. In addition, this damage is attributed to country-specific influences rather than to migration, human capital, or investment factors. As the intensity of the measure used to proxy the conflict increases, there are enhanced neighbor spillovers. Moreover, collateral damage from civil wars to growth is more pronounced in the short run.