Violence Cost Global Economy $14.8t in 2017

The Institute for Economics and Peace estimated that in 2017 violence cost the global economy $14.8 trillion, equivalent to 12.4% of GDP—nearly $2,000 a person. Europe was ranked as the most peaceful region in the world, while the Middle East and North Africa were the least peaceful.

The US came in 121st out of 163 nations in the latest report “Global Peace Index”, prepared by the Institute for Economics and Peace, headquartered in Sydney, Australia, just ahead of Myanmar and far behind top scorers Iceland and New Zealand, news outlets reported.

China finished 112th in the survey, while Russia was ranked the 154th most peaceful country. Bringing up the rear in the survey were Iraq, South Sudan, Afghanistan and Syria.

Violence cost the Indian economy a whopping $1.19 trillion in constant purchasing power parity terms, which amounts to roughly $595.4 per person, says the report based on an analysis of 163 countries and territories.

The global economic impact of violence is defined as the expenditure and economic effect related to "containing, preventing and dealing with the consequences of violence".

The estimates include the direct and indirect cost of violence as well as an economic multiplier. "The multiplier effect calculates the additional economic activity that would have accrued if the direct costs of violence had been avoided," the report noted.

The fall in peacefulness over the decade was caused by a wide range of factors, including increased terrorist activity, the intensification of conflicts in the Middle East, rising regional tensions in eastern Europe and Northeast Asia, and increasing numbers of refugees and heightened political tensions in Europe and the US, it added, PTI said.

Asian Region

About the Asia-Pacific region, it said it remained the third most peaceful region in the world despite a slight fall in its overall peacefulness. There were notable improvements in both internal and external conflicts fought and relations with neighboring countries, but violent crime, terrorism impact, political instability and political terror all deteriorated across the region.

For South Asia, the report said strengthening scores on the Political Terror Scale, refugees and internally displaced person and terrorism impact were only partially offset by a deterioration in external conflicts fought after a border dispute with China flared in the Doklam Pass. The three-month standoff also involved India, which sent troops to the area, it added.

In this region, the two least peaceful nations—Afghanistan and Pakistan—continued their decline. Besides, Bangladesh and Myanmar also saw deterioration, including due to the Rohingya crisis.

Economic Impact

"The total economic impact of violence (globally) was higher in 2017 than at any point in the last decade," the report said, adding that the global economic impact of violence increased by 2.1% from 2016 to 2017, mainly due to a rise in internal security expenditure.

Syria topped the list of most affected countries by economic cost of violence as a percentage of GDP at 68%, followed by Afghanistan (63%), Iraq (51%) in the second and third position respectively.

Others in the ten most affected countries by economic cost of violence include El Salvador, South Sudan, Central African Republic, Cyprus, Colombia, Lesotho and Somalia.

The report further noted that there has been a widening "prosperity gap" between less and more peaceful countries. Since 1960, the most peaceful countries have, on average, seen their per capita GDP grow by an annual rate of 2.8%.

On the other hand, less peaceful countries have experienced economic stagnation. Their annual per capita GDP has, on average, grown by just 1% over the last seven decades.

Switzerland is the least affected country in terms of economic cost of violence, followed by Indonesia and Burkina Faso.

Among emerging markets violence impacted $1.704 trillion to the Chinese economy, Brazil ($5.113 billion), Russia ($1.013 trillion) and South Africa ($2.394 trillion).

Among developed nations, for the US, the cost of violence in terms of PPP was $2.67 trillion or 8% of the GDP. For the UK, it was $312.27 billion, 7% of GDP.