Inequality, conflict and developmentFrances Stewart1 Remove the secondary causes that have produced the great convulsions of the world and you will almost always find the principle of inequality at the bottom. Either the poor have attempted to plunder the rich, or the rich to enslave the poor. If, then, a society can ever be founded in which everyman shall have something to keep and little to take from others, much will have been done for peace (de Tocqueville 1835, quote from 1954 edition,: 266) 2Structure of talk What sort of conflict? Some consequences of conflict Causes of conflict Focus on Horizontal Inequalities Policy implications3Debate on inequality and conflict What type of conflict? Non-violent conflict; Violent conflict: Domestic Criminality Group violence: Government/power Communal Here concerned with group violence, both government and communal.4Violent conflict important in poor countries Prevalence high (though declining in last ten years). Proportion of ethnic conflict rising Has highly damaging impact on economy and welfare Undermines states/governance. Weak states thought to be source or facilitator of global terrorism.5Source: Nils Petter Gleditsch, Peter Wallensteen, Mikael Eriksson, Margareta Sollenberg and international data on 25 worst affected countries, 1970-1995. Weak data The counterfactual- before and after - with and without - regional comparisons1010Case studies Afghanistan Mozambique Nicaragua Sierra Leone Sri Lanka Sudan Uganda11 11Findings:macro GDP almost always negative impact supported by econometric work. Investment (public and private) negative, but foreign savings rose so fell by less than domestic savings. Consumption per head fell with per capita GDP, though generally not proportionately, as savings ratio fell. Exports in US dollars fell in two-thirds of the countries; But six countries achieved a rise. Both Angola (exporting minerals) and Iran (oil) high rates of growth of exports. import capacity often held up supported by aid and private credit: foreign debt spiralled. Agriculture negative, especially where people fled (Mozambique; Afghanistan); and where war occurred in central agricultural area Uganda; Cambodia. But agricultural growth sustained in Sri Lanka, Sudan.1212 Government Revenue, biggest divergencies. Nicaragua and Ethiopia revenue ratio rose sharply. Sustained revenue collection in Mozambique, Angola and Vietnam. Uganda and Iran it fell dramatically. Large fall in Somalia, Cambodia and Afghanistan Expenditure increased more than revenue. Budget deficits increased everywhere Massive deficits in Mozambique, Nicaragua and Somalia - more than 15% of GDP. Elsewhere (e.g.Uganda and El Salvador) small deficits of less than 5% of GDP. .1313Findings (meso) Sectoral shifts : switch to subsistence and informal activities - simple production and trading (particularly smuggling); towards agriculture. Allocation of government expenditure to military invariably rose; mostly share of social expenditure fell, sometimes severely (Ethiopia and El Salvador). But social expenditure share sustained at high levels in Mozambique, Guatemala and Nicaragua. Social expenditure per head fell sharply in Uganda, El Salvador (over 50% per head). Rose in Mozambique, Nicaragua and Sudan.1414151516161717Summary of entitlement changesEntitlements = peoples command over resources. Market entitlements fell wages from employment; earnings from self-employment; rising inflation Direct entitlements rose except where the war made production difficult e.g. in mined areas in Afghanistan,Mozambique; the Lowero triangle Uganda. Public entitlements mostly fell, especially sharply where tax capacity collapsed. But in a few cases governments managed to preserve and even increase them. Civic entitlements compensated for losses in some cases: e.g. Sri Lanka. But where the wars were most fierce, the ability of communities and NGOs to respond was limited. Non-legal entitlements (looting, illegal trade) invariably rose with losers as well as gainers. New sources of trade and gain - illegal and legal: poppy production in Afghanistan; smuggling; informal sector Mozambique. 1818Development costs Every study showed heavy development costs: Destruction of physical plant land human resources (death and light) social and organisational capital And new investment reduced. Yet emergence of new forms of capital including social and organisational1919Summary of negative development impacts Generally, high growth costs (2%+ GDP p.a.). But exceptions (Guatemala). Investment falls, and econ, infra. destroyed. Mozambique two-thirds reduction in operational dams and plant nurseries Nepal development expenditure in Nepal fell by one-third, 2001-2004. IMR rising: estimated that Uganda, additional infant deaths, compa