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The Economic Impact of War: A Double-Edged Sword

  


War, whether internal or international, leaves an unremovable mark on a country’s economy. "War does not determine who is right — only who is left." - Bertrand Russell. War has multi aspect effects and devastating consequences on people.  

Negative Effects

  1. Infrastructure Damage:

  • War destroys roads, bridges, factories and homes. Rebuilding them requires significant resources and funds from other essential sectors in a country. The destruction of Aleppo during the Syrian civil war is an example of it. 

  1. Decline in Working Population:

  • Casualties and displacement reduce the labor force which affects productivity. World War II led to millions of deaths and displaced people and can be viewed as a lesson for us to learn about the negative side of war on the public. 

  1. Inflation:

  • War necessitates increased government spending that can lead to inflation. For example, Zimbabwe’s hyperinflation during the Rhodesian Bush War. 

  1. Rise in Debt:

  • Governments borrow heavily during war which can result in higher public debt. The U.S. national debt surged during the Iraq and Afghanistan wars is a great example of this effect. 

  1. Disruption to Economic Activity:

  • Trade, investment and production are meant to suffer due to conflict. The ongoing conflict in Yemen has devastated its economy and shows how war can destroy a country’s economy. 

Other Effects

Although war has many negative impacts, it has a few other effects too. Such as:

  1. Demand Creation:

  • War can create demand for supplies and services related to defense, reconstruction and medical supplies. For instance, military contracts help industries like aerospace and technology improve and advance. 

  1. Employment and Innovation:

  • War-related production creates job opportunities and helps technological advancements. An example for this effect can be that World War II improved innovations in aspects like radar, aviation and medicine.

  1. Profits for Businesses:

  • Some companies can profit from war-related contracts such as defense contractors benefit during armed conflicts. 

Opportunity Cost

  • While war spending creates demand, it comes at an opportunity cost. Resources dedicated to war could have been used for education, healthcare or poverty alleviation. The Vietnam War diverted funds from social programs and is an example of how the funds that could have been used to have positive impacts in the country, are utilized in war. 

War has multi side effects. Its devastating impact on a country or society is beyond balance sheets or GDP figures. Let’s remember that war causes lives to be lost, dreams to be gone, families to be shattered, cultures and communities to be destroyed. It has non removable effects and can affect generations.

By M. Nargis
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