The economic impact of violence offers insights into the economic benefits resulting from improvements in peace. The Institute has developed an innovative methodology to calculate the economic impact of violence to the economy. This is achieved by calculating 13 different types of violence related spending at the national level and applying a multiplier effect to account for the lingering influence of violence and fear.

Violence has adverse implications for the broader economy, both in the short and long term, as it hinders productivity and economic activity, destabilises institutions and reduces business confidence. These disruptions result in adverse and ongoing negative effects well after the conflict subsides. These effects include reduced GDP growth, a less predictable economy, higher unemployment, lower levels of foreign direct investment and higher interest and inflation.

Substantial economic improvements are linked to improvements in peace. When peacefulness improves, funds previously allocated to containing violence can be redirected towards more productive activities, yielding higher returns and increasing GDP.  Therefore, it is imperative for government policies to prioritize and foster peacefulness, particularly in the context of a subdued economic activity due to the post COVID-19 environment and escalating global conflicts.