Abstract

An adverse economic shock can be dangerous because its impact may be long-lived if countries are forced into a vicious cycle of low human development and conflict. Drawing on a review of both theoretical and empirical literature, this paper frames the connection between economic factors and conflict within a conceptual framework in which levels of human development and the risk of conflict are linked. While conflict might be caused by many factors, low levels of human development increase the risks of conflict outbreaks and recurrence. Conflict, in turn, destroys the accumulated physical, social and human capital. The linkage between conflict and human development may form a self reinforcing cycle. And consequently, policy measures to sustain human development would also have an additional indirect impact in lowering the risk of conflict.