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Inequality, conflict and development

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Title: Inequality, conflict and development


1
Inequality, conflict and development
  • Frances Stewart

2
  • Remove the secondary causes that have produced
    the great convulsions of the world and you will
    almost always find the principle of inequality at
    the bottom. Either the poor have attempted to
    plunder the rich, or the rich to enslave the
    poor. If, then, a society can ever be founded in
    which everyman shall have something to keep and
    little to take from others, much will have been
    done for peace (de Tocqueville 1835, quote from
    1954 edition, 266)

3
Structure of talk
  • What sort of conflict?
  • Some consequences of conflict
  • Causes of conflict
  • Focus on Horizontal Inequalities
  • Policy implications

4
Debate on inequality and conflict
  • What type of conflict?
  • Non-violent conflict
  • Violent conflict
  • Domestic
  • Criminality
  • Group violence
  • Government/power
  • Communal
  • Here concerned with group violence, both
    government and communal.

5
Violent conflict important in poor countries
  • Prevalence high (though declining in last ten
    years).
  • Proportion of ethnic conflict rising
  • Has highly damaging impact on economy and welfare
  • Undermines states/governance.
  • Weak states thought to be source or facilitator
    of global terrorism.

6
Number of conflicts by level all types
Source Nils Petter Gleditsch, Peter
Wallensteen, Mikael Eriksson, Margareta
Sollenberg Håvard Strand, 2000, Armed Conflict
19462000 A New Dataset, www.pcr.uu.se.  
7
Trends in ethnic conflict, 1945-2004
8
War and Human Development
  • Direct impact
  • Much indirect via economic effects

9
GNP
ENTITLEMENTS
FOOD PROD.
EXPORTS
OTHER
MARKET WAGES
INFLATION
IMPORTS
EMPLOYMENT
TAX REVENUE
BUDGET DEFICIT
FOREIGN AID AND CAPITAL?
DIRECT?
GOV. EXPEND
CIVIC?
MILITARY SHARE
ECONOMIC SHARE
SOCIAL SHARE
PUBLIC
Likely fall
EXTRA-LEGAL
Likely rise
9
10
Methodological issues
  • Case studies (seven) and international data on
    25 worst affected countries, 1970-1995.
  • Weak data
  • The counterfactual
  • - before and after
  • - with and without
  • - regional comparisons

10
11
Case studies
  • Afghanistan
  • Mozambique
  • Nicaragua
  • Sierra Leone
  • Sri Lanka
  • Sudan
  • Uganda

11
12
Findingsmacro
  • GDP almost always negative impact supported by
    econometric work.
  • Investment (public and private) negative, but
    foreign savings rose so fell by less than
    domestic savings.
  • Consumption per head fell with per capita GDP,
    though generally not proportionately, as savings
    ratio fell.
  • Exports in US dollars fell in two-thirds of the
    countries But six countries achieved a rise.
    Both Angola (exporting minerals) and Iran (oil)
    high rates of growth of exports.
  • import capacity often held up supported by aid
    and private credit foreign debt spiralled.
  • Agriculture negative, especially where people
    fled (Mozambique Afghanistan) and where war
    occurred in central agricultural area Uganda
    Cambodia. But agricultural growth sustained in
    Sri Lanka, Sudan.

12
13
  • Government Revenue, biggest divergencies.
  • Nicaragua and Ethiopia revenue ratio rose
    sharply.
  • Sustained revenue collection in Mozambique,
    Angola and Vietnam.
  • Uganda and Iran it fell dramatically. Large fall
    in Somalia, Cambodia and Afghanistan
  • Expenditure increased more than revenue. Budget
    deficits increased everywhere  
  • Massive deficits in Mozambique, Nicaragua and
    Somalia - more than 15 of GDP. Elsewhere
    (e.g.Uganda and El Salvador) small deficits of
    less than 5 of GDP.
  • .

13
14
Findings (meso)
  • Sectoral shifts switch to subsistence and
    informal activities -- simple production and
    trading (particularly smuggling) towards
    agriculture.
  • Allocation of government expenditure to military
    invariably rose mostly share of social
    expenditure fell, sometimes severely (Ethiopia
    and El Salvador).
  • But social expenditure share sustained at high
    levels in Mozambique, Guatemala and Nicaragua.
  • Social expenditure per head fell sharply in
    Uganda, El Salvador (over 50 per head). Rose in
    Mozambique, Nicaragua and Sudan.

14
15
15
16
16
17
17
18
Summary of entitlement changes
  • Entitlements peoples command over resources.
  • Market entitlements fell
  • wages from employment
  • earnings from self-employment
  • rising inflation
  • Direct entitlements rose except where the war
    made production difficult e.g. in mined areas
    in Afghanistan,Mozambique the Lowero triangle
    Uganda.
  • Public entitlements mostly fell, especially
    sharply where tax capacity collapsed. But in a
    few cases governments managed to preserve and
    even increase them.
  • Civic entitlements compensated for losses in
    some cases e.g. Sri Lanka. But where the wars
    were most fierce, the ability of communities and
    NGOs to respond was limited.
  • Non-legal entitlements (looting, illegal trade)
    invariably rose with losers as well as gainers.
    New sources of trade and gain - illegal and
    legal poppy production in Afghanistan
    smuggling informal sector Mozambique.

18
19
Development costs
  • Every study showed heavy development costs
  • Destruction of physical plant
  • land
  • human resources (death and light)
  • social and organisational capital
  • And new investment reduced.
  • Yet emergence of new forms of capital including
    social and organisational

19
20
Summary of negative development impacts
  • Generally, high growth costs (2 GDP p.a.). But
    exceptions (Guatemala).
  • Investment falls, and econ, infra. destroyed.
    Mozambique two-thirds reduction in operational
    dams and plant nurseries Nepal development
    expenditure in Nepal fell by one-third,
    2001-2004.
  • IMR rising estimated that Uganda, additional
    infant deaths, compared with non-war regional
    trends, amounted to over 2 of the 1995
    population in Cambodia over 3.. Econometric
    evidence, 13 worsening.
  • Social infrastructure commonly destroyed
    Mozambique, almost 60 of primary schools were
    closed or destroyed (Bruck, 2001a,p 67).
  • Human capital is killed, or flees. About half the
    doctors and 80 of the pharmacists left Uganda in
    the late 1970s ((Dodge Wiebe, 1985)).
  • NB costs variable.

21
Governance impact variable
  • Generally weakens govt. but variable
  • International wars can strengthen govt.
  • Internal wars sometimes state collapse e.g.
    Somalia Uganda late 1970s Afghanistan
  • Sometimes govt. remains strong but with power
    limited geographically Sri Lanka Indonesia.
  • Big variation shown by revenue raising.

22
(No Transcript)
23
Turning to causes
  • Primordialist culture clash clash of
    civilisations (Huntington).
  • Rationalist view individual maximisation
    economics by other means.
  • Broken social contract
  • Greenwar.
  • Youth bulge.
  • Group inequalities.

24
Cultural causes Conflicting identities,
arising from fundamental differences between
people
  • Too much emphasis to cultural differences. In
    many contexts no major conflict despite plurality
    of cultures (Tanzania Malaysia Brazil).
  • Only 0.01 of potential cultural conflicts in
    Africa are actual conflicts.
  • Identities constructed not innate.

25
Construction of identities
  • Identities constructed, not given. Constructed
    and accentuated by leaders to achieve objectives
    e.g. economic (Cohen) political/administrative
    (colonial governments)
  • Modern Central Africa tribes are not so much
    survivals from a pre-colonial past but rather
    colonial creations by colonial officers and
    African intellectuals.. (Wim van Binsbergen).

26
Use of identities for mobilising support for
conflict
  • Identities not plucked from air constrained by
    history, language etc. Shared markers (language,
    behaviour, rituals, religious practices).
  • Ethnic differences seem real to participants.
  • The very effectiveness of ethnicity as a
    means of advancing group interests depends upon
    its being seen as primordial by those who make
    claims in its name Turton.

27
But for conflict cultural difference alone
insufficient
  • Cultural differences only become salient or
    potentially a means of mobilisation, when OTHER
    factors present.
  • Cohen
  • Men may and do certainly joke about or ridicule
    the strange and bizarre customs of men from other
    ethnic groups, because these customs are
    different from their own. But they do not fight
    over such differences alone. When men do, on the
    other hand, fight across ethnic lines it is
    nearly always the case that they fight over some
    fundamental issues concerning the distribution
    and exercise of power, whether economic,
    political, or both

28
Economic explanations /motives for violent
political mobilisation
  • Rationalist,or individual greed profits and jobs
    from wars (Keen Collier and Hoeffler). Case
    studies and some econometrics. But
  • very few contemporary conflicts can be
    adequately captured as pure instance of
    resource warsEconomic incentives have not
    been the only or even the primary causes of these
    conflicts (Ballentine and Sherman).

29
2. Failure of social contract
  • - due to inequality and poverty, weak growth,
    lack of social services, weak political security.
  • Some supporting evidence
  • Countries with low-incomes/life expectancy
    conflict more likely (cause as well as effect).
  • Weak governments (cause and effect)- association
    with conflict due to poor repressive machinery as
    well as failed social contract.

30
Inequality and conflict
  • Very mixed evidence on normal (vertical)
    inequality measure and conflict
  • 1989 survey by Lichbach
  • Recent econometric evidence on vertical
    inequality also mixed. But limited evidence.
  • Situation is different when we examine horizontal
    inequality.

31
Inequality and conflict
  • Most economists measure and evaluate VERTICAL
    inequality among individuals or households.
  • And most attention paid to income inequality.
  • Policies (efficiency/poverty) all in terms of
    individuals.
  • Theorising and measuring welfare (utilitarians)
    or wellbeing and capabilities (Sen) focus on
    individuals.

32
Horizontal Inequality
  • HI is inequality between groups .
  • What groups? groups with meaning to members,
    viewed by people themselves, or others as
    important aspect of identity.
  • Examples of salient identities
  • Ethnic/tribe African
  • Religious most regions notable N.Ireland
    Middle East Indonesia Nigeria
  • Race e.g. South Africa Malaysia Fiji
  • Regional (overlaps with other identities)
    E.Timor Eritrea, Bangladesh.
  • Caste (S.Asia)
  • Class

33
Important question what determines group
boundaries?
  • Boundaries can be arbitrary.
  • Multiple identities. Which do we/others
    emphasise? E.g. white black classification,
    Brazil/US
  • Fluid. Mestiso in Latin America. Indigenous,
    cholo.
  • Salient groups can change over time. (Moslems in
    Sri Lanka Iwerri in Biafra).
  • Yet firm enough in some contexts to kill and die
    for.

34
HIs are Multidimensional
  • Dimensions are those that matter to members
    affect well-being, sense of injustice, actions.
  • Salient dimensions vary according to nature of
    society/economy, and position (leaders/followers).
  • Important dimensions include
  • Politics (political participation, power, at all
    levels).
  • Economic resources and outcomes (access to
    assets, employment, incomes).
  • Social, including services (health/education/water
    .. and social networks).
  • Cultural recognition.
  • Should also be true of vertical, but despite lip
    service rarely included.

35
HIs as mobilising agent
  • HIs combine identity (which binds group) and
    grievance
  • Ethnic or religious boundaries are a powerful
    source of mobilisation in general, but
  • Especially where there are blatant HIs.
  • Leaders of groups (orchestrators) motive may be
    lack of political power (political HIs).
  • Followers mind about political exclusion but more
    about economic and social

36
Role of class
  • Latin America especially class more of identity
    apparently than ethnicity.
  • Can perform same role as mobiliser.
  • Often coincides with other differences
    (indigenous race)
  • Where class is group identity, sharp HI
    inevitable.
  • Diminishing role of class post-cold war rising
    role of ethnicity
  • a virtual cornucopia of these seemingly
    intractable (and previously invisible) social
    identity conflicts exploded onto the world scene
    and captured the public and policy eyes.
    (Center for Systematic Peace)

37
HIs and Political stability many examples
  • Genocide
  • Rwanda
  • Pre-war German.
  • Violent conflict
  • Kosova
  • Sri Lanka
  • Nepal
  • Indonesia (Aceh East Timor).
  • Also riots
  • US cities in 1970s
  • Sporadic, cities in UK
  • City riots in India.
  • Also applies internationally Moslem/Western
    divide.

38
Some examples of major HIs.
39
CRISE research programme
  • Objective
  • to study multiethnic societies, investigating
    why some experience political instability and
    violent conflict, often labelled as ethnic,
    while others manage to solve disputes relatively
    peacefully and thereby provide the
    preconditions for the promotion of human
    security and sustainable growth.
  • Major hypothesis
  • That existence of high Horizontal Inequalities
    makes conflict more likely, where Horizontal
    Inequalities are inequalities among culturally
    perceived groups.

40
Programme coverage
  • Three region/eight country research plus some
    global analysis.
  • West Africa
  • Ghana/Cote dIvoire/Nigeria
  • SEAsia
  • Indonesia/Malaysia (and a little elsewhere).
  • Latin America
  • Bolivia/Guatemala/Peru.

41
HIs large in our countries
  • Bolivia IMR of indigenous population 50 per cent
    higher than nonindigenous
  • Peru the proportion of indigenous with secondary
    schooling 1/5 that of whites
  • Guatemala 20 of indigenous population in
    extreme poverty in 2000 5 nonindigenous.
  • Nigeria maternal mortality rates in northeast
    are 9 times in southwest.
  • Côte dIvoire the literacy rate for Northern
    Mande is just 23 per cent, half the rate among
    the Akan
  • Ghana Northern Region child mortality rate is
    nearly 2.5 times Ghana as a whole
  • Malaysia despite considerable improvement,
    Chinese incomes on average, over 1.6 times
    Malays.

42
CRISE RESEARCH SOME FINDINGS
  • Probability of conflict rises as socio-economic
    HIs increase Econometric cross-country evidence
    by Ostby Gurr Barrows Within country evidence,
    Mancini Gates and Murshed. Using a variety of
    group definitions and HI definitions.
  • N.B.Probability not certainty. Therefore need to
    explore WHEN and WHY

43
CRISE RESEARCH SOME FINDINGS
  • 2. Conflict more likely where political and
    socio-economic HIs are consistent.
  • - political HIs motivate leaders
    socio-economic followers.
  • - examples Cote dIvoire, versus Malaysia and
    Nigeria. Warri versus Calbar.

44
CRISE RESEARCH SOME FINDINGS
  • 3. Inclusive government tends to prevent
    conflict.
  • - Econometric evidence shows that PR, and
    federalism tends to reduce conflict probability.
  • - Contrast Bolivia and Peru and Guatemala Ghana
    and Nigeria and Cote dIvoire.

45
CRISE RESEARCH SOME FINDINGS
  • 4. Citizenship can be important source of
    exclusion.
  • - citizenship confers political, economic and
    social rights. Therefore source of general
    exclusion (HIs)
  • - source of exclusion
  • i. States decide to remove citizenship
    rights (Nazis Uganda towards Asians)
  • ii. Migrants refused citizenship even after
    generations (Cote dIvoire)
  • iii. State changes Czechoslovakia
    division left Roma peoples stateless.
  • - can be LOCAL as well as national Indonesia,
    Ghana and Nigeria, Indigenes versus settlers.

46
CRISE RESEARCH SOME FINDINGS
  • 5. Cultural status inequalities important
  • Where sharp they bind people together and help
    mobilise people
  • Represent powerful grievance in themselves
  • Can be a major source of other inequalities (e.g.
    language restrictions).
  • Events often act as a trigger Orange Marches
    destruction of mosque.

47
CRISE RESEARCH SOME FINDINGS
  • 6. Perceptions important as well as observed
    inequalities.
  • E.g. in Nigeria and Ghana, dont perceive big
    differences in access to education, but do
    perceive differences in access to govt. jobs and
    contracts.
  • In Nigeria, with broadly same HIs as Ghana,
    generally perceive themselves as more ethnic and
    less national.

48
CRISE RESEARCH SOME FINDINGS
  • 7. Natural resources can be important source of
    HI, creating
  • -regional inequalities in incomes
  • - regional resentments about rdistribution
  • - within region inequalities.
  • This is one mechanism linking NR to conflict
    others include finance, and greed.

49
CRISE RESEARCH SOME FINDINGS
  • 8. Nature of state hugely important as to whether
    HIs lead to conflict.
  • - state accommodating in Ghana conflicts less
    so in rest of West Africa.
  • - state actions in Aceh, Indonesia, and
    Guatemala fueled and prolonged conflict.
  • - accommodating state in Sabah, Malaysia
    prevented violent separatism in contrast to
    Thailand, Philippines, East Timor.

50
CRISE RESEARCH SOME FINDINGS
  • 9. Many HIs very persistent.
  • Persistent inequalities in Ghana (North-South)
    US black-white indigenous people, Latin America
  • Last centuries.
  • Wellbeing impact worse because of this.

51
THE PERSISTENCE OF HIS North south inequalities
in Ghana over 60 years
52
THE PERSISTENCE OF HIS Reasons for persistence
in HIs
  • Initial inequality (often colonial cause) leads
    to multiple disadvantages
  • 1.Inequality of incomes generates inequalities
    in accumulation, including Hk.
  • 2. Asymmetry of social capital, especially
    marked across groups, because groups have more
    intra-group contacts and fewer between group
    contacts. Poorer groups have less advantageous
    contacts.
  • 3. Interaction among capitals low Hk worsens
    returns to financial capital low financial
    capital reduces returns to Kk. Low social capital
    reduces returns to each.
  • 4. Continued discrimination.
  • 5. Political HIs which reinforce disadvantage.

53
THE PERSISTENCE OF HIS Returns to education in
Peru.
54
CRISE RESEARCH SOME FINDINGS
  • 10. Policy conclusions
  • HIs can be serious and make conflict more likely.
  • Policy needs to address them, in all economies
    with marked inequalities, not only those coming
    out of conflict.
  • Important for general wellbeing and poverty
    reduction as well as political stability
  • NOT included in normal economic or political
    policies.

55
International policies generally worse than
national
  • HIs neglected, in international policy
  • Aid, often worsens HIs.
  • And structural adjustment
  • Ignored in most PRSPs
  • Also in political conditionality of elections
    and multiparty democracy
  • But included in Human rights approach and
    Social exclusion approach.
  • Regional bodies can be helpful (EU)
  • Much more often included in national policies.
  • International governance exclusive, despite UN

56
POLICIES 3 types of policy
  • Direct targeted. Can be effective. But can lead
    to opposition and entrench ethnicity.
  • Indirect may be less effective, but also arouse
    less hostility.
  • Towards greater integration very long term and
    has costs.

57
Policies towards political HIs
  • Critical importance reduces leadership motives
    and contributes to correct economic
  • Structures needed to ensure that each group
    participates in political decision-making and
    power. Not Westminster majoritarian political
    system plus winner takes all.
  • Power sharing is NOT natural consequence of the
    way many understand democracy.
  • NB Participation can be at many levels (central,
    regional, local) and in different types of
    decision (defence, economic, social) and in
    different activities (army, police, civil
    service).

58
Policies towards political HIs
  • Indirect
  • Federal or unitary (and design)
  • Extent and nature of decentralisation
  • Voting system majoritarian PR alternative
    vote.
  • Voting system within assemblies.
  • Constitutional guarantee of rights and freedoms
  • Direct.
  • Reserved seats.
  • Job allocation (and numbers). Three Presidents in
    Bosnia-Herzogoviniaall levels of government
  • Political parties
  • Restrictions on parties
  • Citizenship rights. Who is a citizen?

59
Policies towards socio-economic HIs
  • Indirect
  • Legal rights anti-discrimination
  • Progressive taxes and expenditure
  • Redesign of incentives (inc. macro policies)
    according to ethnic specialisation.
  • Comprehensive services
  • Direct
  • Quotas and targets towards education asset
    ownership employment subsidies government
    procurement.

60
Categories of econ/soc. Policy- mainly targeted
  • Assets
  • Land (Malaysia Zimbabwe Fiji Namibia)
  • Financial capital (Malaysia S.Africa)
  • Terms of privatisation often unequalising
  • Credit (Fiji Malaysia)
  • Education (Malaysia Sri Lanka).
  • Skills and training (Brazil, New Zealand)
  • Public sector infrastructure (S.Africa).
  • Housing (N.Ireland).
  • Social capital? neighbourhoods clubs
  • Incomes
  • Employment policies
  • Public sector (Malaysia Sri Lanka)
  • Private sector (S.Africa)

61
Experience with affirmative action economic and
social
  • Used quite frequently.
  • Major examples
  • Fiji
  • India
  • Malaysia
  • N.Ireland
  • S.Africa
  • Sri Lanka
  • US

62
Consequences
  • May reduce inter-group inequality, but increase
    intra-group. (But intra-group decreased in
    Malaysia depends on designm of policies).
  • Negative impact on on efficiency? No evidence in
    fact reverse.
  • Claimed to entrench ethnicity as category. But
    with sharp HIs these may be entrenched anyway
    (N.Ireland, US). If changes ethnic division of
    labour may reduce ethnic salience.
  • Can provoke political protest, even violence, Sri
    Lanka clearest example. Micro (non-policy) cases
    in Indonesia. But elsewhere reduces political
    violence Malaysia, N. Ireland, US

63
Integrationist policies
  • Education
  • Media
  • National symbols
  • But
  • Can threaten cultural identities (France)
  • May disguise inequalities (Peru)

64
Malaysia a successful case of reducing
econ/social HIs.
  • 1971, following anti-Chinese riots, 1969. NEP.
    Aim to secure national unity. 
  • Characteristics.
  • Two prong to reduce and eventually eradicate
    poverty and to accelerate the process of
    restructuring Malaysian society to correct
    economic imbalance so as to reduce and eventually
    eliminate the identification of race with
    economic function (Second Malaysian Plan
    1971-1975)
  • a variety of anti-poverty policies (rural
    development social services).
  • restructuring
  • expand Bumiputera share of capital ownership to
    30.
  • 95 of new lands to be settled on Malays
  • educational quotas in public institutions laid
    down, in line with population shares
  • credit policies favoured Malays, with credit
    allocations and more favourable interest rates.

65
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66
N.Ireland economic changes underlying political
ones
  • His large, persistent and consistent over all
    dimensions over a long time period
  • By the end of the nineteenth century Protestants
    controlled the vast bulk of the economic
    resources of east Ulster - the best of its land,
    its industrial and financial capital, commercial
    and business networks, industrial skills (Ruane
    and Todd 1996)
  • No narrowing of the gap between the communities
    from 1901 to 1970s, with Catholics disadvantaged
    at every level.
  • New policies to reduce gaps from late 1970s Fair
    Employment Acts, 1976 1989 housing policy.
    Police Acts 1998,2000, 2003 50 recruitment aim.

67
(No Transcript)
68
N. Ireland intervention on HIs and peace
Troubles
Cease fire
Good Fri agreement
69
But Protestant discontent
  • Case shows that action on HIs may need to precede
    peace.
  • Exodus of young Protestants to GB.
  • 2003, Ps. perceived themselves disadvantaged. 39
    believe they are worse off than six years ago.
  • 1996, 44 of Ps and 47 Cs thought
    inter-community relationships were better than
    five years before.
  • 2003, 25 Ps and 33 Cs.

70
Political sensitivity Sri Lanka case
71
What about governance?
  • Shows importance of inclusive forms of power at
    every level again usually neglected issue in
    governance reforms.
  • Need so be built into requirements of good
    governance.

72
And international dimension
  • International dimensions to the issue
    economic/social/political/cultural across
    Islam/West divide.
  • Needs to be tackled at multidimensional/multisite
    levels.
  • Within west in political and economic terms.
  • Between countries, in political and economic
    terms.
  • And within developing countries.

73
In conclusion
  • Where HIs are large, important to address them.
  • Range of policies available, economic and
    political, which can be effective without
    sacrifice of efficiency.
  • Mostly have had peace-promoting political
    consequences, but political caution needed.
  • Policies needed in ANY society with sharp
    divisions, not only those with recent conflict.
  • And for international inequalities.
  • Policies NOT part of many policy agendas,
    including economic and political reform, or aid.
    .
  • NB. Other policies also needed, of course.
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