Is conflict an additional structural obstacle for least developed countries?

Abstract

Conflict is highly interlinked with low development, and thus imposes huge development challenges for least developed countries. However, it remains unclear whether conflict is a result of bad policy or a structural impediment to growth which is the main characteristic of the least developed countries. We examine the differences between conflict-affected and peaceful least developed countries, and show that some of the least developed country indicators, particularly those related to human assets, are clearly linked with the conflict indicators. Analysis of individual conflict-affected least developed countries reveals that indicators on human assets improve after peace is restored, while economic vulnerability reaches its peak prior to the conflict outbreak. As additional direct impact of conflict on human capital, an increase in dependency ratios due to conflict has so far not been captured by the indicators determining the least developed countries. We argue that, while conflict may not be a structural factor, a high dependency ratio due to conflicts could be a structural obstacle to growth, an additional structural characteristic of conflict-affected least developed countries.