Poverty, Armed Conflict And Financial Instability
Source: University of Cambridge
Civil conflict has far-reaching effects on underdeveloped economies. Whilst military expenditure may be diverted into projects that encourage human capital accumulation and the construction of essential infrastructure, conflict destroys institutions and infrastructure generating financial instability and exacerbating stagnation and underdevelopment. Vicious circles emerge as socioeconomic instability contributes to ongoing civil unrest and financial instability, in turn increasing the risk of future conflicts. In this paper, the relationships between conflict, finance and poverty are analysed by exploring the hypothesis that poverty and conflict are magnified by financial factors.