Conflict and development

Ejaz Ghani, Lakshmi Iyer, 23 March 2010



South Asia is the second most violent place on earth after Iraq. While conflicts in Afghanistan and Pakistan have attracted global attention, parts of India, Sri Lanka, and Nepal have also experienced long-running conflict. The result is human misery, destruction of infrastructure and social cohesion, and death. The knock-on effects are huge.

What is conflict? Where is it concentrated? Is conflict a problem for development, or a failure of development? What should policymakers do?

Conflict is a clash between two opposing groups, external or internal to the country. An example of external clash is state-to-state conflict, which is on the decline. Internal conflicts have resulted in three times as many deaths as wars between states since World War II (Fearon and Laitin 2003).

There are two types of internal conflict. The first is conflict against the state or civil war. Examples of this are terrorism, which is an extreme manifestation of conflict and reflects a certain degree of organisation of conflict. It is carried out by a relatively organised group of non-state actors, and directed against the state. The second category includes people-to-people conflict, or ethnic conflict. Examples of this include localised land conflicts, religious and ethnic riots, homicides or other crimes (Stewart 2008, Varshney 2002).

These two types of conflict have evolved differently in South Asia. People-to-people conflict has declined. In India, communal and ethnic riots between Hindus and Muslims are on a downward trend but terrorism has increased.

Is conflict a problem for development, or a failure of development?

Figure 1 plots conflict rates (number of people killed in terrorist incidents normalised by population) and real per capita income for a large group of countries. The downward sloping line suggests that countries that have low per capita income have higher conflict rates. This is consistent with other findings that report higher conflict rates in low income countries (Collier et al. 2003).

The relationships between conflict, income, and poverty are much more complex than is commonly supposed. High income does not guarantee peace and stability. Figure 1 shows that the relationship between conflict and per capita income is not very tight – there are many countries which are outliers. What is even more striking is that these outliers are concentrated in South Asia. Most South Asian countries (except for Bangladesh) have much higher conflict rates for their stage of development.

Figure 1. Conflict and violence, 1998–2004

Source: Global Terrorism Database II, 1998-2004. 2008.

Note: Figure takes the arithmetic mean for fatalities and income per capita for the period 1998–2004. Fatality is the number of total confirmed fatalities for the incident. The number includes all victims and attackers who died as a direct result of the incident.

It is not possible to infer causality from Figure 1. If it is conflict which holds back development, then policymakers should focus on controlling conflict, i.e., increase military and police interventions to reduce conflict. But if it is low income and high poverty which cause conflict, then the focus should be on direct policy interventions to reduce poverty and human misery. In India, there is evidence that states that had higher incomes and fewer police had less violence than ones that had more police and less income (Justino 2009). There is also some evidence that horizontal inequalities (inequality between identity groups) can be a factor in causing conflict (Stewart 2008). This suggests that it is not enough just to have “development” but it must be shared fairly across groups.

Given the inverse association between conflict and per capita income, we would expect that conflict rates should be much higher in lagging regions within countries – i.e. those regions that have lower per capita income compared to national average? Indeed, this is exactly what we find – conflict is concentrated in lagging regions within countries.

Figure 2 shows that in India, Bangladesh, Nepal, Pakistan, and Sri Lanka, conflict is concentrated in the lagging regions. Conflict rates are higher in the lagging regions of Pakistan (Baluchistan, Federally Administered Tribal Areas, and North-West Frontier Province), India (Maoist insurgency in Bihar, Chhattisgarh, Jharkhand, and Orissa), Sri Lanka (North), and Nepal. Lagging regions have experienced more than three times the number of terrorist incidents per capita, compared with leading regions, and almost twice as many deaths per head of population in such incidents.

Figure 2. South Asia conflict incidents

What triggers conflict?

Conflicts can be triggered by low economic growth which leads to a lower economic opportunity cost of rebellion against state in poor areas. Low economic growth in certain areas can be the result of unequal distribution in gains from development or political marginalisation. A second trigger for conflicts is a natural disaster. The lagging regions of South Asia suffer from both types of problems – low economic growth and higher vulnerability to natural disasters. The lagging regions have experienced much slower economic growth compared to leading regions. They are also more vulnerable to droughts and floods. The consequences of conflict on development are more severe in lagging regions because they have weak institutions, poor geography, and are poorly integrated with global markets. These are also the characteristics that limit economic growth in lagging regions.

Leading regions also suffer from conflict and poverty in South Asia but they have managed them better because of rapid economic growth, job creation, and better safety net programmes.

What should policymakers do to reduce conflict?

A speech given by the Prime Minister of India, Dr Manmohan Singh, to a Conference of Chief Ministers on Internal Security and Law and Order in 2005, sums up the story of conflict and development well:

“…Whatever be the cause, it is difficult to deny that extremism has huge societal costs. Investments are unlikely to fructify, employment is not likely to grow and educational facilities may be impaired. In all, the society at large and people at large suffer. Delivery systems are often the first casualty. Schools do not run, dispensaries do not open… the threat of Naxalism is geographically spread out to the more backward regions and districts of our country…”

Reducing conflict is a prerequisite to political stability, which, in turn, is the prerequisite for implementing pro-growth policies. Even in a best-case scenario, the presence of low-level conflict constrains the policies governments can implement to promote growth.

Policymakers in South Asia have tried various policies to reduce conflict. The most common approach to deal with insurgencies, terrorism, or internal violence is to use the police forces to establish law and order in the affected areas. The police forces in South Asian countries, however, tend to be understaffed and underequipped. In cases where police forces are insufficient, the armed forces are called in to deal with the insurgency. In most cases, this has not been a successful strategy. Even when these measures are successful in defeating the insurgents, as in Sri Lanka, the human cost associated with military operations is very high.

A different approach to dealing with insurgencies is to conduct negotiations and sign peace agreements with the insurgents. To be effective, this approach needs two conditions:

  • the government must negotiate in a coordinated way and fulfil at least some of the insurgents’ demands; and
  • the insurgent group must be genuinely interested in joining the political mainstream. This approach has been tried in some areas of South Asia. For instance, the Indian government has signed peace deals with several separatist groups in the northeastern states, granting them a higher degree of local autonomy in some cases. Similarly, negotiations with some Tamil groups such as the EPRLF have resulted in their integration into mainstream politics.

At the same time as the security-based solution, there are economic solutions. These involve the government expanding welfare programmes to reduce poverty in the conflict-affected areas as a means to undercutting the support for the insurgency. This approach is consistent with economic backwardness as a cause of conflict and has been tried in some conflicts in South Asia, but it has failed because of poor choices of economic policies and poor implementation in conflict regions.

Choosing the right policy

Policy choices and their implementation are critical in preventing an escalation of conflict and in post-conflict reconstruction. Economic policies should be geared not just to maximise growth, but also to address the distributional or political factors that led to the conflict. Policy choices must be structured to reduce real or perceived inequality. Aid agencies should work through the existing government institutions, be pragmatic in order to create jobs quickly, and in most cases, work on short-term economic goals first and address medium-term and longer-term efficiency considerations later. This approach calls for humanitarian treatment of conflict-affected people, closure of refugee camps, and reintegration of refugees within society.

Cross-border cooperation between countries should be an integral part of any strategy to reduce conflict. Many of the internal conflicts in South Asia have cross-border dimensions. The Taliban in Afghanistan obtain significant support from Pakistan’s border areas. The Maoists in Nepal formed close links with the Maoist movements in India. Many separatist groups in India’s northeastern states have training camps and cells in neighbouring countries like Bangladesh and Bhutan. The Liberation Tigers of Tamil Eelam and other Tamil separatist groups in Sri Lanka have traditionally enjoyed support from the Tamil Diaspora in India and other countries. In such a context, regional cross-border cooperation is an essential part of any counterinsurgency strategy. Considerable potential exists for regional cooperation in reducing conflict, but this strategy has been underused in combating terrorism in South Asia.

Going forward, regional cooperation initiatives, which have so far been underused, are likely to be important in countering terrorism. South Asian governments have taken a variety of different approaches to fight terrorism. Reviewing these approaches in the South Asian and global context, it appears that the armed forces or local militias have not been especially effective in combating terrorism. Strengthening police forces or conducting negotiations to induce insurgents to join the political mainstream appear to be more effective approaches. Social welfare programmes rather than just economic incentives hoping to revive growth can be useful complements to this political accommodation approach. The challenge is to balance these different approaches toward countering conflict, as well as the optimal economic policies to be adopted in post-conflict environments.

Disclaimer: A summary of this column appeared in World Bank Ending Poverty in South Asia Blog. This column draws on the authors’ ongoing work on South Asia’s Poor Half Billion. The views expressed here are personal and not those of the World Bank.


Collier, Paul, V I Elliott, Hårvard Hegre, Anke Hoeffler, Marta Reynold-Querol, Nicholas Sambanis (2003), Breaking the Conflict Trap: Civil War and Development Policy, Oxford University Press.

Fearon, James and David Laitin (2003), "Ethnicity, Insurgency, and Civil War", American Political Science Review, 97:75-90.

Justino, Patricia (2009). "The Impact of Armed Civil Conflict on Household Welfare and Policy Responses", Research Working Papers 12, MICROCON - A Micro Level Analysis of Violent Conflict.

Stewart, Frances (ed) (2008), Horizontal Inequalites and conflict: Understanding group violence in Multiethnic Societies, Palgrave.

Ashutosh Varshney (2002), Ethnic Conflict and Civic Life: Hindus and Muslims in India, Yale University Press.

Topics: Development
Tags: Conflict, development, India, South Asia

Ejaz Ghani

Lead Economist in Economic Policy and Debt, PREM Network, World Bank

Lakshmi Iyer

Lakshmi Iyer is Associate Professor at Harvard Business School.