The Colombian conflict: its costs and the impact of peace

THE ARMED CONFLICT IN COLOMBIA

19% combatants

81% civilians

9% due to Paramilitary groups

El 91% due to Guerrilla groups

KIDNAPPINGS

VICTIMS

Source: National Centre of Historical Memory

TERRORIST ATTACKS

VICTIMS

95

CASES

Dead

Injured

223

1.343

2% due to paramilitary groups

MASSACRES

1.982

11.751

VICTIMS

CASES

15% due to unidentified groups

81% due to guerrillas

17% due to guerrillas

59% due to paramilitary groups

In absence of conflict, the child population would have attained an aditional year of education. This effect is doubled when it comes to the teenaged population.
The economic return of an additional year of basic schooling is 600.000 colombian pesos yearly (about 200 dollars).

The armed conflict reduces the average years of schooling by 8.78% among the child population in Colombia. This estimate reaches 17.03% for people among 16 and 17 years old.

CONFLICT EXPOSITION IS ASSOCIATED WITH LESS HUMAN CAPITAL ATTAINMENT

THE ARMED CONFLICT IN COLOMBIA

715

5.138

CASES

VICTIMS

Dead

Injured

218

497

1.344

716

CASES

VICTIMS

WARFARE ACTIONS

 “The 50 municipalities that experienced more attacks on civilians had a five times higher probability of disappearance of their productive facilities”
–Marcela Eslava
Furthermore, the conclict affects the state capacity measured in terms of tax collection and investment in public gooods.
“If the amount of conflict related deaths in a municipality is doubled, then 10% of its fiscal income is lost.”

An increase of one standard deviation on the quantity of violent attacks in the municipalities, increases the probability of disappearance of their productive facilities by 8,1%.

THE ARMED CONFLICT IN COLOMBIA

CONFLICT EXPOSITION IS ASSOCIATED WITH ECONOMIC CONTRACTIONS

25.007

VICTIMS

5.712.506

VICTIMS

4.744.046

VICTIMS

FORCED DISPLACEMENT

Forced displacement is a direct pathway towads cronic poverty. The poverty rate among displaced people doubles the national average.

THE ARMED CONFLICT IN COLOMBIA

FORCED DISPLACEMENT

2.119

8.070

Dead

Injured

Strong: over 3 conflict events.

Regions where the conflict is persistent, suffer higher levels of violence. Mainly located on periferic areas of the country.

Source: CERAC.

The conflict affected most of the country

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Persistence: presence of armed conflict during the entire period of study*

* Based on data covering the 2000-2012 period.

Source: CERAC.

The conflict affected most of the country

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Strong: over 3 conflict events.

* Based on data covering the 2000-2012 period.

Pacific Ocean

Panama

* Based on data covering the 2000-2012 period.

Light: less than 3 conflict events

Interrupted: there are entire years without armed conflict

Source: CERAC.

The conflict affected most of the country

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Strong: over 3 conflict events.

* Based on data covering the 2000-2012 period.

Source: CERAC.

The conflict affected most of the country

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Finalized: Last 8 years without armed conflict.*

Light: less than 3 conflict events

* Based on data covering the 2000-2012 period.

Source: CERAC.

The conflict affected most of the country

Atlantic Ocean

Venezuela

Brazil

Peru

Pacific Ocean

Panama

Source: Villa, E., Moscoso, M., & Restrepo, J. (2014). Crecimiento, conflicto armado y crimen organizado: evidencia para Colombia & CERAC.

The idealistic aproach…

“The conflict costs around 4.4 percentage points of the national GDP growth rate”

IMPROBABLE

Observed GDP Growth

Potential GDP Growth without conflict

GDP Growth Rate (%)

3
years after agreement

10
years after agreement

5
years before agreement

3
years before agreement

Agreement
year

5
Years after agreement

Conflict termination
36 countries

Peace agreement
31 countries

Similar conditions to Colombia 18 countries

Regardless of the magnitude of the peace impact on economic growth, this will be transitory -Remember Solow-
A long-term effect requires a permanent increase in the productivity rate. This will only be achieved if a policy of competitiveness and productivity that capitalizes on the lower country risk arising from post-conflict is launched. It is vital to seize this unique opportunity.
There has never been an important jump in the long-term rate of economic growth in the Latin American countries that ended armed conflict, without a military defeat of any party (Nicaragua, El Salvador and Guatemala).*
Under these considerations, additional growth of between 0.3% and 0.6% in the years after the end of conflict, concentrated in the agriculture sector and remote areas is expected.
Half a point more of annual growth for 10 years means 7 additional points of growth in a decade and hence, a clear path towards regional convergence.

The costs of the conflict are not only military spending: according to the Institute for Economics and Peace, the total cost of containment of violence in Colombia corresponds to 10.8% of GDP. The estimate includes costs associated with: -Private security
-Conflict related deaths
-Fear
-Forced displacement
-Prison system, etc.

Military expenditure (%GDP)

Military expenditure (%GDP) in Colombia

Is about
$12
billon COP per year

Less direct costs

A hypothetical scenario: a reduction of our current spending to one that matches a high level in the Latin American context -Chile 2% of GDP.

Average of civilians death due to FARC actions

During negotiations

Before negotiations

Upsurge 1996-2002

Uribe’s Presidency 2002-2010

Democratic Security Policy 2002-2012

Historic: 1984-2012

Santos’ Presidency before negotiation 2010-2012

Periods without unilateral FARC ceasefire

Historic: entire negotiation process 2012-2015

Periods with unilateral FARC ceasefire

Periods with bilateral ceasefire

MDGs, Competitiveness, and Conflict Prevalence

MDGs General
Performance

Competitiveness General
Performance

Conflict Prevalence

Darker color means higher

Less asset losses

Universal Primary Education

Gender Equality

Reduce Child Mortality

Improve Maternal Health

Combat HIV and others

Environmental Sustainability

Global partnership Development

General

Source: Gómez H.J. et al, Los Objetivos del Desarrollo del Milenio y la Competitividad en Colombia. PNUD. CPC. 2015

Less asset losses

Institutions

Exports

Private Sector

Human Capital

Infrastructure

General

Performance on competitiveness variables according to conflict prevalence

Conclusions…