Economics of Conflict, War, and Peace (Summer 2009)
EBA Programme, Faculty of Economics, Chulalongkorn University, Bangkok, Thailand

Level: Freshmen year | Type: Lecture/seminar
Time: Tuesday/Thursday (two sessions/day: 13:30-14:45 and 15:15-16:30 hrs)
Prerequisite: Basic microeconomics
Professors: Jurgen Brauer [Germany/U.S.]; J. Paul Dunne [U.K.]
Email: Brauer: jbrauer@aug.edu | Dunne: john2.dunne@uwe.ac.uk
Course outline: This eight-weeks long survey course introduces students to how elementary economics may be employed to think about questions of conflict, war, and peace. The point of the course is not to provide ready-made answers but to induce thinking about complex problems and to generate enthusiasm about the topic. While there will be some lecturing and demonstration of techniques, we also emphasize reading, reflection, and discussion.

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Requirements

Individual work:
- Attendance (punctual and wide awake), preparation (readings/note taking), and participation (note taking; class discussion) [10%].
- Two exams to check on readings & lecture materials (one midterm; one final) [25% each].

Group/collaborative project:
- A “mini-project” [part of attendance, preparation, participation grade], explained on the first day of class.
- A 10-12-page, double-spaced paper for groups of 2-4 students each: solid draft outline due at the beginning of the midterm exam [10%]; final paper due at beginning of the final exam [30%]. Late submissions not accepted. Potential topics listed below.

Academic honesty: While discussion and cooperation among students is encouraged, cheating, ghostwriting, plagiarism, or other forms of dishonesty on the exams or in the preparation of the final paper is not tolerated and results in a failing grade for the course.

Group paper [some of the material hereunder is by courtesy of Prof. Charles Anderton]

Purpose and schedule: The purpose of the paper assignment is for you to write about a peace, conflict, or security issue from the perspective of economics. Your paper may involve perspectives from other disciplines (e.g., political science, history, sociology), but you should focus on using economic concepts and an economic model to develop one or more of your major points. Although it is important to use economic methods in explaining your topic, do not overuse or “force” the economic analysis just to satisfy the assignment. Instead, use economic concepts and a model to strengthen and deepen your analysis and presentation.

In practical terms, (1) you need to ask a research question that you wish to answer, (2) you need to use data, and (3) you need to use some economic theory to answer the question. By Thursday, 11 June, you need to give Prof. Brauer a one-paragraph statement of your question and the data you may wish to use, and you need to list the (nick)names and emails of the members of your group. By Thursday, 25 June, you need to provide Prof. Brauer with a thorough 2 to 3 page outline of your group paper (in print and emailed as a Word or pdf document), describing the progress you have made (1) in refining the question, (2) in collecting, preparing, and analyzing the data, and (3) indicating the theory or theoretical method to be used to address your research question. The progress report is due at the BEGINNING of the midterm exam. By Thursday, 9 July, you need to email Prof. Dunne with a one-page update describing the overall progress you have made. The final, complete paper (in print and as an emailed file) is due on Thursday 23 July at the BEGINNING of the final exam.

Group paper topics: When considering possible paper topics, it is important to find one that is narrow, well-defined, manageable, and amenable to economic analysis. For example, a paper about war in general is too broad. A better focus would be a specific small-scale war (e.g., 1995 Peru/Ecuador border conflict), a particular battle (e.g., Gettysburg), or a particular engagement within a battle (e.g., Little Round Top at Gettysburg). When searching for a paper topic, consider reviewing newspapers, weekly periodicals, or reputable online sources. The class readings provide numerous applications of economics to conflict topics. Many of these leads could be followed up and developed into a paper.

Alternatively, consider the following statements: (1) terrorism is mostly a transnational phenomenon rather than a domestic one; (2) violent, armed conflict is mostly about genuine political grievance, not about greed; (2) all over the world, military expenditure has declined since the end of the cold war; (4) small arms production and trade are more important than that of major conventional arms; (5) private military companies are becoming a substitute for conventional state armed forces. Take a statement such as these, convert it into a question or hypothesis, and then examine it in detail. Of course, you can also ask specific questions right away, e.g., (1) what is the cost of terrorism on the airline industry? (2) what is/was the cost of the Sri Lankan civil war on the country’s economic growth and standard of living? (3) what cost does violent crime impose on the United States? (4) what is the benefit of the NATO alliance on its member states? (5) do all rebel groups follow certain economic principles of organizational behavior (e.g., with regard to recruitment, finance, planning, and action)?

In 2008, students worked on topics such as the following: (1) an examination of the Palestinian labor market and standard of living during the Israeli/Palestinian conflict; (2) a mapping and analysis of conflict-related news stories printed in The Bangkok Post to the various topics and theories discussed in class; (3) how much is the government of Thailand willing to trade-off economic development in pursuit of security? (4) the conflict diamonds market: case study of Sierra Leone; (5) the economics of Japan’s post-world war two recovery; and (6) United States war and inflation scenarios.

Group paper length and format: Your paper should be typed, double-spaced with 1 inch margins, 12-type font, at least 10 written pages in length, but no more than 12 written pages. The page length requirement is exclusive of title page, figure/s and table/s (if any), and list of references. Your paper should be submitted in the following format: title page, text, endnotes (if any), references, figure/s and table/s (if any). You must hand in a hard (printed) copy of your paper and email a copy of the paper to Prof. Dunne (an emailed paper by itself, without a printed copy, will not be accepted and results in a failing grade for the paper). You should also have properly formatted references in your paper.

Group paper assessment: Your paper will be graded on content (e.g., sound economic analysis, good use of economic model, appropriate data) and on how well it is written (e.g., concise statements, logical constructions, no misspellings, no grammatical errors, etc.). Prof. Brauer and Prof. Dunne are available in person before class, during class breaks, after class, during office hours, by email, or by appointment to discuss paper topics with you and comment on your work-in-progress.

When writing your paper you may find it useful to ask the following questions:
1. Do the opening two paragraphs contain a clear description of what the paper is focusing on (the topic) and do they contain a clearly stated research question?
2. Does each paragraph have a main point that justifies the paragraph’s presence in the paper?
3. Do the paragraphs follow in a logical order?
4. Does the conclusion follow from the material presented in the paper?
5. Are your arguments supported by examples, graphs, and/or data or are you offering weakly supported opinions?
6. Does your model strengthen the paper or is it used just for the sake of including a model?
7. Is the paper marred by misspellings, errors in syntax, poorly chosen words, or excessive quotations?
8. Are references presented in a proper and consistent format?
9. Does the paper show clear insight and careful thought?
10. Has the paper gone through multiple drafts and has the final draft been proofread?

Thursday 4 June 13:30-14:45 hrs
Lecture notes: Session 1.3 (ppt) | Session 1.3 (pdf) (A first look at data sources)
Readings:
- Smith, R. (1998). “Quantitative Methods in Peace Research.” Journal of Peace Research 35(4):419-427. [here]
- Students: examine data web sites such as those listed in Session 1.2; find more data source sites on your own and share with fellow students and professor.

Thursday 4 June 15:15-16:30 hrs
Lecture notes: Session 1.4 (ppt) | Session 1.4 (pdf) (Modeling conflict)
Readings:
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 9.1] [textbook]
- Boulding, K. (1970 [1968]). “A Pure Theory of Death: Dilemmas of Defense Policy in a World of Conditional Viability,” pp. 112-130 in K.E. Boulding, Beyond Economics: Essays on Society, Religion, and Ethics. Ann Arbor, MI: The University of Michigan Press. [here]
- Brzoska, M. (2004). “Taxation of the global arms trade.” Kyklos 57(2):149-172. [here]

Week 2: Tu 9 June | Th 11 June

[Brauer] — Consequences of violent conflict: lost human and physical capital, lost current and future output, intergenerational effects, transboundary effects, environmental effects.

This segment surveys and discuss some of the full economic costs – opportunity costs – of violent conflict. Beyond the immediate and obvious effects on which most people focus, the cost of conflict often reaches two, three, or more generations into the future; they can also result in transboundary effects (e.g., refugee spill-overs), affect diaspora communities (e.g., Tamils in Canada), or carry long-run environmental consequences.

Tuesday 9 June 13:30-14:45 hrs
Lecture notes: Session 2.1 (ppt) | Session 2.1 (pdf) (Contemporaneous, short- to medium-term effects)
Reading:
- Brück, Tilman (2005). “An Economic Analysis of Security Policies.” Defence and Peace Economics 16(5):375-389. [here]
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 12, esp. section 12.3] [textbook]
- Anderton, C.H. and R.A. Anderton (1997). “The Economics of Conflict, Production, and Exchange,” pp. 54-82 in J. Brauer and W. Gissy, eds. Economics of Conflict and Peace. Aldershot, UK: Avebury Press. [here]

Tuesday 9 June 15:15-16:30 hrs
Lecture notes: Session 2.2 (ppt) | Session 2.2 (pdf) (Intergenerational/long-term effects)
Reading:
- Sandler, T. (1999). “Intergenerational Public Goods: Strategies, Efficiency and Institutions,” pp. 20-50 in I. Kaul, I. Grunberg, and M.A. Stern, eds., Global Public Goods: International Cooperation in the 21st Century. New York: Oxford University Press. [here]

Thursday 11 June 13:30-14:45 hrs
Lecture notes: Session 2.3 (ppt) | Session 2.3 (pdf) (Transboundary effects)
Readings:
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 7] [textbook]
- Murdoch, J. and T. Sandler (2002). “Civil Wars and Economic Growth: A Regional Comparison.” Defence and Peace Economics 13(6):451-464. [here]
- Salehyan, I. and K.S. Gleditsch (2006). “Refugees and the Spread of Civil War.” International Organization 60(2):335-366. [here]

Thursday 11 June 15:15-16:30 hrs
Lecture notes: Session 2.4 (ppt) | Session 2.4 (pdf) (Environmental effects)
Reading:
- Brauer, J. (forthcoming). “Environmental Consequences of War,” in N. Young, ed. The International Encyclopedia of Peace. New York: Oxford University Press. [here]

Week 3: Tu 16 June | Th 18 June

[Brauer] — Manpower: all-volunteer forces, conscripted (coerced) forces, private military companies, militia forces, irregular and rebel forces, terrorism, banditry, illegal activity, organized crime.

A good bit of literature exists to probe the dis/incentive systems associated with various forms of organizing force in historical and modern-day perspective; this segment allows considerable leeway to discuss, e.g., the economics of human resource management and how its insights might apply to the raising, management, and dismissal of armed forces. The themes of banditry, illegal activity, and organized crime also open up links to substantial economics literature that can usefully be tapped and mined for behavioral insights.

Tuesday 16 June 13:30-14:45 hrs
Lecture notes: Session 3.1 (ppt) | Session 3.1 (pdf) (Official state forces)
Readings:
- Poutvaara, P. and A. Wagener (2007). “Conscription: Economic Costs and Political Allure.” The Economics of Peace and Security Journal 2(1):6-15. [here]
- Simon, C. and J. Warner (2007). “Managing the All-Volunteer Force in a Time of War.” The Economics of Peace and Security Journal 2(1):20-29. [here]

Tuesday 16 June 15:15-16:30 hrs
Lecture notes: Session 3.2 (ppt) | Session 3.2 (pdf) (Private military companies)
Readings:
- Brauer, J. (2008). “Private Military Companies: Markets, Ethics, Economics,” pp. 102-115 in A. Alexandra, D.-P. Baker, and M. Caparini, eds. Private Military Companies: Ethics, Theory, and Practice. London: Routledge. [here]
- Williamson, O.E. (1999). "Public and Private Bureaucracies: A Transaction Cost Economic Perspective." Journal of Law, Economics, and Organization 15(1):306-342. [here]

Thursday 18 June 13:30-14:45 hrs
Lecture notes: Session 3.3 (ppt) | Session 3.3 (pdf) (Nonstate forces, esp. terrorism)
Readings:
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 8] [textbook]
- Llussa, F. and J. Tavares (2007). “The Economics of Terrorism: A Synposis.” The Economics of Peace and Security Journal 2(1):62-70. [here]

Thursday 18 June 15:15-16:30 hrs
Lecture notes: Session 3.4 (ppt) | Session 3.4 (pdf) (Nonstate forces, esp. terrorism [continued])
Readings:
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 8] [textbook]
- Enders, W. and T. Sandler (2006). Political Economy of Terrorism. New York: Cambridge University Press. [chap. 4] [here]

Week 4: F 19 June | Tu 23 June

[Brauer] Week 4 — Capital: ABC weapons, major conventional weapons, small arms and light weapons, nonlethal weapons, nonconventional weapons.

The conduct of violent conflict, or threat thereof, presupposes the availability of the means of armed violence. These means are acquired at various costs and offer various benefits that purveyors of armed violence must assess in some fashion. This segment of the course examines several types of weapons and has students think about these from a supply (production and cost) and demand-perspective.

Friday 19 June 13:30-14:45 hrs
Lecture notes: Session 4.1 (ppt) | Session 4.1 (pdf) (ABC/WMD/nonconventional weapons)
Readings:
- Anderton/Carter (2009). Principles of Conflict Economics. [chap. 10] [textbook]
- Brauer, J. (2007). “Arms Industries, Arms Trade, and Developing Countries,” pp. 973-1015 in T. Sandler and K. Hartley, eds. Handbook of Defense Economics. Vol. 2. Amsterdam: Elsevier. [here]

Friday 19 June 15:15-16:30 hrs
Lecture notes: Session 4.2 (ppt) | Session 4.2 (pdf) (Major conventional weapons)
Readings:
- Brauer, J. (2007). “Arms Industries, Arms Trade, and Developing Countries,” pp. 973-1015 in T. Sandler and K. Hartley, eds. Handbook of Defense Economics. Vol. 2. Amsterdam: Elsevier. [here]
- Brauer, J. and J.P. Dunne (2005). “Arms Trade Offsets and Development.” Africanus [South Africa] 35(1):14-24. [here]

Tuesday 23 June 13:30-14:45 hrs
Lecture notes: Session 4.3 (ppt) | Session 4.3 (pdf) (Small arms production and trade)
Readings:
- Brauer, J. (2007). “Arms Industries, Arms Trade, and Developing Countries,” pp. 973-1015 in T. Sandler and K. Hartley, eds. Handbook of Defense Economics. Vol. 2. Amsterdam: Elsevier. [here]
- Brauer, J. and R. Muggah. (2006). "Completing the Circle: Building a Theory of Small Arms Demand". Contempory Security Policy. 27(1):138-154. [here]
- Markowski, S., S. Koorey, P. Hall, and J. Brauer. (2008). "Channels of Small Arms Proliferation: Policy Implications for Asia-Pacific." Economics of Peace and Security Journal. 3(1):79-85. [here]

Tuesday 23 June 15:15-16:30 hrs
Lecture notes: Session 4.4 (ppt) | Session 4.4 (pdf) (Review session for midterm exam)

Midterm exam: Th 25 June 13:30-16:30 hrs

Week 5: Tu 30 June | Th 2 July | F 3 July
[Tu 30 June — no class: both lecturers are at international conferences]

[Th 2 July: Brauer/Dunne] — Prof. Paul Collier’s lecture to the Royal Economic Society (video)
Lecture notes: Session 5.1 [return of midterm exam] | Session 5.2 [Paul Collier's lecture on War and Peace in Africa here]

[F 3 July: Dunne] — The international arms market: defense-industrial base, production, procurement, financing, trade
An overview of the major conventional and small arms industries — quantities traded, prices, number of firms, etc. — and the international arms trade. Permits a discussion of defense-industrial base, procurement and acquisition policies, and inherent contracting issues and arms-trade offset issues..

The Arms Market I
Notes 1 | Notes 2 |
Readings:
Paul Poast (2006) "The Economics of War", Mc Graw-Hill. Chapter 5.
EB Kapstein (1992) "the political Economy of National Security", Mc Graw Hill, Ch 4,5
"Arms Production" Chapter 9 in Stockholm International Peace Research Institute (SIPRI) Yearbook, 2006. With Eamon Surry. Draft here tables here
"Arms Production, Economics of", Forthcoming 2007 in Lester Kurtz (ed) Encyclopaedia of Violence, Peace and Conflict, 2nd edition. Elsevier. With Elisabeth Skons. Draft here
Paper on Sector Futures: Defence Industry prepared with Cambridge Econometrics for European Monitoring Centre on Change, can be found here
"The Evolution of the International Arms Industries", in Wolfram Elsner(ed)(2007) Arms, War, and Terrorism in the Global Economy Today -Economic Analyses and Civilian Alternatives. ISBN 3-8258-0045-8. With Maria Garcia-Alonso, Paul Levine and Ron Smith here
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 5 here
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 6 here

Week 6: Tu 7 July | Th 9 July (no classes — Buddhist Day and Graduation Day)

Week 7: M 13 July | Tu 14 July || Th 16 July | F 17 July

The Arms Market II
Notes 3 | Notes 4

The Arms Trade
Notes
Readings:
Paul Poast (2006) "The Economics of War", Mc Graw-Hill. Chapter 5.
Ethan B Kapstein (1992) "The political Economy of National Security", Mc Graw Hill, Ch 4,5
David Kiefer "International Arms Trade After the Cold War", Chulalongkorn Journal of Economics Volume 13 Number 2 May 2001 here
"The Impact of a Responsible Arms Control Policy on the UK Economy" Report prepared for Oxfam, for their Control Arms campaign, 2003. Mimeo, School of Economics, University of the West of England. With Sam Perlo-Freeman. Available here
Anthony Sampson (1991) The Arms Bazaar, Coronet books.
Some useful background here and here and here - Smith, Ron (2009) "Military Economics", Macmillan. Chapter 6 here

Military Expenditure, Growth and Development
Notes
Readings:
Dunne, Paul (2008) "Does High Spending on Arms Reduce Economic Growth? A Review of Research" Report for Oxfam. March. Draft here
Smith D and R Smith (1983) The Economics of Militarism. Pluto Press, London.
Dunne P (1990) The Political Economy of Military Expenditure: an introduction, Cambridge Journal of Economics, Vol 14, no 4, pp 395-404.
Brauer, Jurgen and J Paul Dunne (eds) 2002. Arming the South: The Economics of Military Expenditures, Arms Production and Trade in Developing Countries. Palgrave, April. ISBN: 0-333-75440-9
Dunne, Paul (1996)"Economic Effects of Miltary Spending in LDCs: A Survey", Chapter 23 in Nils Petter Gleditsch, Adne Cappelen, Olav Bjerkholt, Ron Smith and Paul Dunne (eds) (1996) "The Peace Dividend", North Holland, pp 439-464. Draft here
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 8: Economic Choices here

Arms Trade Offsets and Development
Notes
Readings:
- Brauer, J. and J.P. Dunne (2005). “Arms Trade Offsets and Development.” Africanus [South Africa] 35(1):14-24. [here]
- Brauer, Jurgen (2002)The Arms Industry in Developing Nations: History and Post-Cold War Assessment. Chapter 5 in Brauer & Dunne (2002) op cit pp 101-127. draft here
- "Defence Industrial Participation: The Experience of South Africa", Chapter 19 in Jurgen Brauer and Paul Dunne (eds) Arms Trade and Economic Development: Theory Policy and Cases in Arms trade Offsets, Routledge, September 2004. With Guy Lamb. Draft here

Week 8: Tu 21 July
[Dunne] — Conflict management: prevention, intervention (peacekeeping), postconflict reconstruction, peace failure, war recurrence
A discussion of possibilities for intervention before, during, and after violent conflict. This segment discusses what dis/incentives community leaders and policymakers can create to regulate violent conflict. What can be done to prevent conflict recurrence? How successful are interventions? What makes peace agreements stable or fragile? This segment also examines how the re/design of institutions and incentives might permit societies to avert violent armed conflict.

Post Conflict Reconstruction.
Notes
Readings:
"After the Slaughter: Reconstructing Mozambique and Rwanda" Economics of Peace and Security Journal, Vol. 1 No. 2, June 2006. ISSN 1749-852X. Here
Paul Collier's lecture on War and Peace in Africa here and his book "The Bottom Billion" [chap. 2] [chap. 2] Oxford University Press.
Bassam Yousif "Economic aspects of peacekeeping in Iraq:what went wrong?", Economics of Peace and Security Journal,Vol. 1 No. 2, June 2006. Here
Christopher Coyne "Deconstructing reconstruction: the overlooked challenges of military occupation", Economics of Peace and Security Journal,Vol. 1 No. 2, June 2006. Here
There are other useful papers in the EPSJ here

There are some old lecture notes by Prof. Dunne on the Economics of Military Spending that you might find useful here
Paper on The Changing Economics of Security presented to the AHE Conference at UWE, July 2007 here