Abstract
Countries emerging from armed conflict face tremendous challenges in restoring peace and development. One of the most serious challenges in this regard is mobilizing adequate resources for financing the reconstruction process. In many post-conflict countries, the resort to external financing resources becomes inevitable. This paper aims to understand how conflict intensity shapes the financing modalities in the post-conflict phase. The study uses statistical inference to compare the differences in key financing resources between two groups of post-conflict developing countries with different conflict intensity. The results show that countries severely affected by the conflict rely more heavily on external financing resources compared to countries moderately affected by the conflict. In particular, foreign aid, foreign investments, and external debt were significantly higher in the severely affected countries relative to moderately affected ones. The differences in most external financing resources between the two groups become more obvious when accounting for major income categories differences. The results were robust for different levels of conflict severity.
Annexes
Annex I
Conflict/post-conflict episodes
| Country | Episode start | Episode end | Post-conflict start | 1st Post-conflict decade end | Severity |
|---|---|---|---|---|---|
| Algeria | 1991 | 2003 | 2004 | 2013 | MAE |
| Angola | 1975 | 2001 | 2002 | 2011 | SAE |
| Azerbaijan | 1991 | 1994 | 1995 | 2004 | SAE |
| Burundi | 1991 | 2003 | 2004 | 2013 | SAE |
| Cambodia | 1970 | 1996 | 1997 | 2006 | SAE |
| Colombia | 1970 | 2005 | 2006 | 2015 | MAE |
| Congo, Rep. | 1997 | 1998 | 1999 | 2008 | MAE |
| Congo, Dem. Rep. | 1996 | 2000 | 2001 | 2010 | SAE |
| El Salvador | 1979 | 1989 | 1990 | 1999 | SAE |
| Ethiopia | 1975 | 1991 | 1992 | 2001 | MAE |
| Georgia | 1991 | 1993 | 1994 | 2003 | SAE |
| Indonesia | 1975 | 1981 | 1982 | 1991 | MAE |
| Lebanon | 1975 | 1976 | 1977 | 1981 | SAE |
| 1982 | 1990 | 1991 | 2000 | ||
| Liberia | 2000 | 2003 | 2004 | 2013 | SAE |
| Morocco | 1975 | 1980 | 1981 | 1990 | MAE |
| Mozambique | 1970 | 1991 | 1992 | 2001 | SAE |
| Myanmar | 1970 | 1992 | 1993 | 2002 | MAE |
| Nepal | 1996 | 2005 | 2006 | 2015 | MAE |
| Nicaragua | 1977 | 1989 | 1990 | 1999 | SAE |
| Pakistan | 1971 | 1977 | 1978 | 1987 | MAE |
| 2007 | 2015 | 2016 | 2018 | ||
| Peru | 1982 | 1993 | 1994 | 2003 | SAE |
| Philippines | 1970 | 1991 | 1992 | 1999 | MAE |
| 2000 | 2003 | 2004 | 2013 | ||
| Rwanda | 1990 | 2001 | 2002 | 2008 | SAE |
| 2009 | 2009 | 2010 | 2018 | ||
| Serbia | 1991 | 1991 | 1992 | 1997 | MAE |
| 1998 | 1999 | 2000 | 2009 | ||
| Sierra Leone | 1991 | 1999 | 2000 | 2009 | SAE |
| South Africa | 1970 | 1988 | 1989 | 1998 | MAE |
| Sri Lanka | 1971 | 1971 | 1972 | 1983 | MAE |
| 1984 | 2001 | 2002 | 2005 | ||
| 2006 | 2009 | 2010 | 2018 | ||
| Turkey | 1984 | 1999 | 2000 | 2009 | MAE |
| Uganda | 1979 | 1991 | 1992 | 1995 | MAE |
| 1996 | 2004 | 2005 | 2014 | ||
| Ukraine | 2014 | 2015 | 2016 | 2018 | MAE |
| Yemen, Rep. | 1994 | 1994 | 1995 | 2004 | MAE |
| Zimbabwe | 1973 | 1979 | 1980 | 1989 | MAE |
Annex II
Upper-middle-income countries excluded from the whole sample
| Country | Average percapita GDP in 1st post-conflict decade | Severity group |
|---|---|---|
| Algeria | 4515.012 | MAE |
| Angola | 3331.085 | SAE |
| Azerbaijan | 3747.077 | SAE |
| Colombia | 6783.082 | MAE |
| Lebanon | 6044.21 | SAE |
| Peru | 4337.845 | SAE |
| Serbia | 5026.768 | MAE |
| South Africa | 6550.166 | MAE |
| Turkey | 10421.28 | MAE |
Annex III
Differences between MAE and SAE using t-test with Welsh’s approximation, 15% GDP loss.
| Indicator | No. Obs. MAE | Mean (MAE) | No. Obs. SAE | Mean (SAE) | Difference (MAE − SAE) | Sig. level | Sig.* |
|---|---|---|---|---|---|---|---|
| GDP annual growth | 181 | 4.937374 | 168 | 6.207842 | −1.270468 | 0.0156988 | * |
| Revenue, excluding grants (% of GDP) | 92 | 19.27428 | 69 | 18.10271 | 1.171572 | 0.4080605 | |
| Tax revenue (% of GDP) | 92 | 13.56468 | 68 | 12.74215 | 0.8225302 | 0.3153803 | |
| Total natural resources rent (% of GDP) | 172 | 9.828358 | 167 | 12.46941 | −2.641056 | 0.0682298 | |
| Net ODA received (% of GNI) | 169 | 3.557539 | 168 | 14.90194 | −11.3444 | 2.36e-15 | *** |
| External debt to GNI | 171 | 54.34974 | 168 | 101.852 | −47.50223 | 0.0002623 | *** |
| Concessional debt (% of total external debt) | 177 | 22.61787 | 172 | 29.66273 | −7.04486 | 0.0129452 | * |
| Personal remittances, received (% of GDP) | 154 | 5.990019 | 142 | 2.99325 | 2.996768 | 6.07e-06 | *** |
| FDI, net inflows (% of GDP) | 175 | 1.959133 | 156 | 6.559412 | −4.60028 | 0.0002743 | *** |
Differences between MAE and SAE using Wilcoxon–Mann–Whitney test, 15% GDP loss.
| Indicator | MAE rank sum | SAE rank sum | Combined rank sum | MAE expected | SAE expected | Combined expected | z | P > |z| | Sig.* |
|---|---|---|---|---|---|---|---|---|---|
| GDP annual growth | 29,620 | 31,455 | 61,075 | 31,675 | 29,400 | 61,075 | −2.182 | 0.0291 | * |
| Revenue, excluding grants (% of GDP) | 7892 | 5149 | 13,041 | 7452 | 5589 | 13,041 | 1.503 | 0.1328 | |
| Tax revenue (% of GDP) | 7839 | 5041 | 12,880 | 7406 | 5474 | 12,880 | 1.495 | 0.1350 | |
| Total natural resources rent (% of GDP) | 26,353 | 31,277 | 57,630 | 29,240 | 28,390 | 57,630 | −3.200 | 0.0014 | ** |
| Net ODA received (% of GNI) | 20,088 | 36,865 | 56,953 | 28,561 | 28,392 | 56,953 | −9.475 | 0.0001 | *** |
| External debt (%GNI) | 26,259 | 31,371 | 57,630 | 29,070 | 28,560 | 57,630 | −3.116 | 0.0018 | ** |
| Concessional debt (% of external debt) | 28,130 | 32,945 | 61,075 | 28,224 | 28,056 | 61,075 | −3.019 | 0.0025 | ** |
| Personal remittances, received (% of GDP) | 25,450 | 18,506 | 43,956 | 22,869 | 21,087 | 43,956 | 3.508 | 0.0005 | *** |
| FDI, net inflows (% GDP) | 25,404 | 29,542 | 54,946 | 29,050 | 25,896 | 54,946 | −4.195 | 0.0001 | *** |
Hedges’ g effect size of mean differences between MAE and SAE, 15% GDP loss.
| Indicator | Effect size estimate Hedges’ g | 95% Confidence interval | |
|---|---|---|---|
| GDP annual growth | −0.2660 | −0.4763 | −0.05544 |
| Revenue, excluding grants (% of GDP) | 0.1323 | −0.1788 | 0.4431 |
| Tax revenue (% of GDP) | 0.1564 | −0.1562 | 0.4685 |
| Total natural resources rent (% of GDP) | −0.1979 | −0.4107 | 0.0151 |
| Net ODA received (% of GNI) | −0.9377 | −1.1616 | −0.7125 |
| External debt (%GNI) | −0.4060 | −0.6203 | −0.1910 |
| Concessional debt (% of total external debt) | −0.2671 | −0.4773 | −0.0566 |
| Personal remittances, received (% of GDP) | 0.5263 | 0.2945 | 0.7573 |
| FDI, net inflows (% of GDP) | −0.4298 | −0.6473 | −0.2116 |
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