This paper provides a broad empirical analysis of the determinants of post-conflict economic transitions across the world during the period 1960–2010, using a dynamic panel estimation approach based on the system-generalized method of moments. In addition to an array of demographic, economic, geographic, and institutional variables, we introduce an estimated risk of conflict recurrence as an explanatory variable in the growth regression, because post-conflict countries have a tendency to relapse into subsequent conflicts even years after the cessation of violence. The empirical results show that domestic factors, including the estimated probability of conflict recurrence, as well as a range of external variables, contribute to post-conflict economic performance.
Will Ghana’s oil production from 2011 accelerate progress toward middle-income status, or will it retard gains in living standards through a possible "resource curse"? This paper examines the likelihood of "resource curse" effects, drawing on a dataset of 150 low and middle income countries from 1973 to 2008 using static and dynamic panel estimation techniques. Results confirm that resource rich countries in Ghana’s income range do experience slower growth than their more diversified peers, an effect that appears to be related to weaker governance. Provided that Ghana can preserve and improve its economic governance and also strengthen fiscal management, prospects look good for converting its oil wealth into sustained strong economic growth.
Natural disasters can put severe strain on public finances, in particular in developing and small countries. But catastrophe insurance markets increasingly offer opportunities for the transfer of such risks. Thus far, developing countries have only tepidly begun to tap these opportunities. More frequent and intensive use of insurance markets may be desirable because it could help introduce an important element of predictability in the post-disaster public finances of disaster-prone developing countries. Against this background, the paper surveys the various available insurance modalities and reviews recent initiatives in developing and emerging market countries. It also identifies some key challenges for the insurance community, donors, and international financial institutions (IFIs).
Each year natural disasters affect about 200 million people and cause about $50 billion in damage. This paper compares the incidence of natural disasters across countries along several dimensions and finds that the relative costs tend to be far higher in developing countries than in advanced economies. The analysis shows that small island states are especially vulnerable, with the countries of the Eastern Caribbean standing out as among the most disaster-prone in the world. Natural disasters are found to have had a discernible macroeconomic impact, including large effects on fiscal and external balances, pointing to an important role for precautionary measures.
Mr. Michael Keen, Mr. Paul K. Freeman, and Mr. Muthukumara Mani
Natural disaster risk is emerging as an increasingly important constraint on economic development and poverty reduction. This paper first sets out the key stylized facts in the area-that the costs of disaster have been increasing, seem set to continue to increase, and bear especially heavily on the poorest. It then reviews the key economic issues at stake, focusing in particular on the actual and prospective roles of, and interaction between, market instruments and public interventions in dealing with disaster risk. Key sources of market failure include the difficulty of risk spreading and, perhaps even more fundamental, the Samaritan's dilemma: the underinvestment in protective measures associated with the rational expectation that others will provide support if disaster occurs. Innovations addressing each of these are discussed.