The Analytics of Conflict and Studying its Economic Impact

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Abstract

In April 2016 it was reported that the Japan International Cooperation Agency (JICA) decided not to invest in the development of the Imphal- Jiribam and Imphal-Kohima highways (which link Manipur to Assam and Nagaland respectively) due to a law and order situation. The JICA was originally supposed to invest approx. 740$ million in the project but ultimately stalled it due to the increase in frequency of attacks across the conflict affected borderland areas of the North East (India). The nature of these attacks includes destruction of construction and property, abduction of labourers, contractors and the destruction of machinery. It’s important to study the economic impact of such incidents have in the long run, which is usually difficult to measure and goes well beyond the immediate loss in monetary terms. It is much more difficult to quantify the overall losses of future benefits that would have accrued if the highways were expanded and substantively improved. The potential benefits may include the enhanced mobility of goods and people; enhanced interconnectivity between Manipur, Nagaland and Assam; the expansion of private carriers (such as bus and taxi services) and the rise of new commodity markets (generating local employment) ultimately catering to an increase in traffic of people, goods and services. Moreover, the sources of internal conflict in the Indian context are multifaceted, yet share similar outcomes i.e. a massive burden on civilians, pervasive insecurity and large scale forced displacement. Areas experiencing instability and civil strife witness significant losses in “future potential” both in investment and the development of human capital. What is not measured is thus, the outflow of capital, the absence of investment, increasing security related expenditures, endemic unemployment and lack of opportunities for the youth in these areas. Therefore, in these studies of analytical frameworks attempting to study the economic impact of various conflicts, there seems to be a methodological lacuna in a) our mainstream understanding of given conflicts (i.e. violence from insurgency, naxalism etc.) and b) in studying its economic impact on the region (over the longer term). While a detailed historical narrative of each situation is beyond the scope of this article, we attempt at providing an overview of the existing statistical data, as an indicative variable to the levels of violence being experienced in various conflict affected areas in India.