|Title: ||Civil War and Human Development: Impacts of Finance and Financial Infrastructure|
|Authors: ||Baddeley, Michelle|
|Issue Date: ||Feb-2011|
|Publisher: ||Faculty of Economics|
|Series/Report no.: ||CWPE|
|Abstract: ||In this paper interactions between finance, development and armed conflict are explored to demonstrate that financial factors are crucial in sustaining conflict-underdevelopment feedback loops. Military expenditure drains resources, financial instability leads to conflict (and vice versa), war retards the development of financial institutions/infrastructure, and interactions between finance and conflict are exacerbated by distributional struggles. Some of these feedback effects are captured within a two-stage model of war, finance and development and this is used as the basis for an empirical analysis. Econometrically, the model is estimated using panel estimation and two stage Probit least squares (2SPLS) binary dependent variable estimation techniques to control for simultaneity and heterogeneity. The results suggest that financial constraints and financial instability increase the chances of civil war directly and, via negative impacts on development, indirectly too.|
|Appears in Collections:||Cambridge Working Papers in Economics|
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