Lecture for LNU - MPA Special Class Dagupan City December 2012

1. Economics of
Peacemaking and
Peacekeeping
Jo B. Bitonio, DPA
Discussant
November 17, 2012
For PNP – MPA Class
San Fernando City

2. It is little known, and therefore little appreciated,
that economists have a long-standing history in making
significant contributions to the analysis of security
issues

3. The most famous of these contributions is
Britain’s John Maynard Keynes’ The
Economic consequences of the Peace
(1920), his advise on how to treat Germany
after its defeat in World War I.
Likewise, the Frenchman Jean Monnet
applied economic thinking to help him
forge the European Coal and Steel Union,
precursor to what has become a factious
but nonetheless peaceful European Union.
Cross-border investment, the locking-up of
valuable assets in each other’s countries,
makes war and mutual invasion rather
more costly.
27
countries

4. The World's Top 5 military spenders
in 2012

5. Stockholm International Peace
Research Institute (SIPRI) is an
independent
International institute
dedicated to research into
conflicts, armaments arms
control and disarmament.
Established in 1966, SIPRI
provides data, analysis and
recommendations, based on
open source, to policymakers,
researchers, media and the
interested public.
SIPRI Military Expenditure
Database 2012

6. The Defense-Growth Nexus
Economists have long debated how military spending affects economic growth and whether
causality runs from defense to growth or vice versa.
 Military spending, as is the case with other government expenditure, may impede economic
growth by crowding-out private investment.
 May also result in distorted resource allocations, and the diversion of resources from
productive activities to the accumulation of armaments and the maintenance of
military forces.
 Military spending could have a positive effect on growth by contributing to the civilian
economy indirectly via enhanced accumulation of human capital and through spillovers of
military R&D.
 In principle, military spending can also affect economic growth positively through the
expansion of aggregate demand (the Keynesian multiplier effect). The resulting increased
demand leads to increased utilization of otherwise idle capital, higher employment and profits,
and therefore higher investment.
(Aamer S. Abu-Qarn:2008)

7. The Defense-Growth Nexus
if any at all, of the decrease in military expenditure of the least developed
countries (LDCs) may be channeled to productive investment. Therefore,
reducing military spending per se may not necessarily enhance
economic growth (Aamer S. Abu-Qarn:2008)

8. • For the major rivals in the Israeli-Arab conflict, only a few
studies have addressed the relationship between defense and
economic growth.
• Often the analyses are conducted in the context of assessing
the dividends of cutting military spending. The findings are
inconclusive and vary depending on the countries, samples,
and econometric methods.

9. Economic Growth and Defense
• Causality may also run the other way around,
from economic growth to defense. Joerding
(1986), for instance, claimed that a growing
country may want to strengthen itself against
foreign or domestic threats by increasing its
military spending. Also, a growing economy may
choose to pour some of the resources generated
by growth to enhance its military capabilities.

10. Major wars, 1,000+ deaths per year
Minor wars and conflicts, fewer than 1000
deaths per year
Wikipedia: List of ongoing military conflicts accessed Nov. 17, 2012

11. Does Development Assistance
can reduce violence?
•
Evidence from Afghanistan
CHOU, Tiffany
Vol 7, No 2 - On Afghanistan, Rwanda, Punjab, July 2012

12. Ella Antonio (2012) Brain trust Inc. Financing Peace and Development:
The Mindanao Budget

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14. Does development assistance
can reduce violence?
• Current military doctrine emphasizes the importance of
development spending in reducing insurgent violence. Using data
from three distinct development programs, the Afghan National
Solidarity Program, USAID’s Local Governance and Community
Development Program, and the U.S. military’s Commander’s
Emergency Response Program (CERP), combined with military
records of insurgent-initiated events, this article explores whether
development aid in Afghanistan is violence-reducing. I find that
overall spending has no clear effect on rebel attacks. Moreover, the
type of development program most effective at reducing violence
in Iraq—small CERP projects—does not appear to do so in
Afghanistan. Possible reasons include troop strength,
conditionality of aid, effectiveness of aid in producing
benign outcomes, and measurement issues.
•
Evidence from Afghanistan, CHOU, Tiffany
Vol 7, No 2 - On Afghanistan, Rwanda, Punjab, July 2012

15. Current Conflict

17. Due to the strategic significance of the region, the Israeli-Arab conflict involved
not only Israel and its neighbors but also other Arab countries as well as the
superpowers that acted to maintain and strengthen their interests in the
region by supporting one or more of the rivals. The United States and the
former Soviet Union actively intervened in the region in the form of military
and economic aid, in addition to providing top-of-the-line arms and training
services. The region served as a battle ground in which American and Soviet
arms and expertise competed against each other.
Several studies have analyzed the role that foreign aid, in general, and of
the in particular, have played in the conflict. Most studies have addressed
the effects of American military and economic aid to Israel (totalling around
$3 billion per annum).

18. Twitter online holy war
News: Israel and Hamas wage Twitter war over Gaza conflict
The Associated Press
BBC News - 19 hours ago
Twitter War Erupts Between Israel and Hamas During Gaza
Strikes
- 2 days ago
As the Israeli Defense Forces waged a military
campaign on Hamas targets in Gaza today, a
different kind of war unfolded on Twitter
between ...
ABC News (blog)

19. Peace dividends
Bringing the conflict to a halt, and ceasing hostile
operations and bloodshed, would by itself constitute
a huge peace dividend. The region has suffered
dearly from many wars and military activities and
incurred considerable human losses. Furthermore,
the conflict has entailed enormous economic costs
for the countries in the region. These include, but
not limited to, the opportunity cost of devoting
scarce resources to defense, disincentives for foreign
direct and portfolio investment inflows, the failure
to fully exploit the potential of production and
services such as tourism, the high risk premium that
limits the ability to borrow from external sources,
inappropriate factor specialization and restrictions
on mobility, welfare losses in terms of inefficient
regional trade and financial arrangements, and slow
development of joint infrastructure projects (ElNaggar and El-Erian, 1993).

20. Costs of Reconstruction
Along with the potentially hefty gains
from peace are several costs, especially
in the short-run. These include
transitional bottlenecks caused by
shifting resources from military to
civilian production, higher transitory
unemployment, increased social
tensions that result from economic
reforms, and the loss of technology
spillovers from military to civilian
industries.

21. Cost of Inaction is
greater than the
Cost of Action

22. Conflicts in the
Philippines
Moro National Liberation
Front (MNLF)
Moro Islamic Liberation
front
Abu Sayyaf
New People’s Army
(Communists Rebels)
Moro national Liberation
Front (MNLF)
The Philippine government and the country’s
largest Muslim rebel group signed a peace deal
in October 2012 that many hope will end
decades of fighting on the southern island of
Mindanao. A second conflict with communist
insurgents continues across the country.
Hundreds of thousands have been
uprooted by fighting
Widespread poverty in war-torn areas
Mindanao situation attracts Islamic
extremists
The Mindanao conflict first flared in the 1960s
when the Muslim minority - known as the
Moros - launched an armed struggle for their
ancestral homeland in the south.
After 15 years of stop-start peace talks, the
government and the Moro Islamic Liberation
Front (MILF) agreed to form a new
autonomous region in the south before 2016

23. Zamboanga Crisis

24. The continuing fighting in Zamboanga City
between government forces and rebels from
the Moro National Liberation Front has
resulted in the shutdown of commercial
activity in Zamboanga City with large numbers
of refugees fleeing from the city.

25. Conflict aftermath in Zamboanga City
A Filipino soldier stands guard
during clearing operation in the
war ravage district of Zamboanga
City

26. after a nearly three-weeks stand-off between
government troops and rebels. Philippine soldiers
were conducting a final search for Muslim rebel
fighters' explosives and booby traps left behind after
20 days of fighting in Zamboanga City

27. A Filipino soldier stands guard during a
clearing operation in the war ravage district
of Zamboanga City

29. Zamboanga city Mayor Maria Isabelle ClimacoSalazar (C) and military commander General Carmelo
Valmoria (L) are seen during clearing operation in the
war ravage district of Zamboanga City

30. Why the Conflict in the Southern Philippines Is Far
From Over. The roots of conflict in the Philippines'
restive south run deep
By Charlie Campbell Sept. 27, 2013
Moro National Liberation Front (MNLF)
rebels marched on the City Hall there
and tried to raise the “Bangsamoro
Republik” flag to signal independence
from the Manila government.

31. Since 2000, a significant proportion of the
population of Mindanao have suffered periods
of displacement due to the impact of the
insurgency, which has resulted in a heavy
economic toll on the population of the region
as well as damaging its economic
development potential.
Rajiv Biswas, Asia-Pacific Chief Economist, IHS,

32. Are we a
government of
reactions than a
government of
anticipation?
VP Binay (2012)

33. References
The Economics of Peace and Security Journal, ISSN 1749-852X
Abu-Qarn, Six decades of the Israeli-Arab conflict p. 8
© www.epsjournal.org.uk – Vol. 3, No. 2 (2008)
Six decades of the Israeli-Arab conflict: an
assessment of the economic aspects
Aamer S. Abu-Qarn

34. References
The Economics of Peace and Security Journal,
ISSN 1749-852X J. Brauer and J.P. Dunne,
Introduction: a new journal 4
© www.epsjournal.org.uk – Vol. 1, No. 1 (2006)