Civil War

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    An LDC in a state of civil war will remain poor because:

    1) Social Capital.

    Social capital is damaged because a civil war means the LDC’s citizens are fighting, they do not trust each other and there is social fragmentation.

    2) Physical Capital.

    Physical capital is also destroyed for example roads, utilities and political institutions. So the economy’s productivity is seriously damaged.

    3) Human Capital.

    People are being harmed and killed so health and human capital will be adversely affected. People lose out on their education because they must flee their homes and schools. In the longrun this will cause the economy to be less efficient so the PPF and real GDP is constrained. Uganda’s former dictator General Idi Amin killed 300,000 people who opposed the ‘President for life’.

    4) Repelled Investors.

    Property may be destroyed and is at constant risk so investment is disincentivized. Firms will not invest if they fear their profits and property will be destroyed or stolen.

    5) Opportunity Cost.

    The government’s funds are diverted away from development and towards fighting crime.

    6) Repelled Tourists.

    The tourist sector will be adversely affected because people do not holiday in war zones. Tourism is a crucial source of revenue and foreign currency for LDCs.

    However, a civil war may not be a major constraint on development because: – The civil war may be isolated, it may only affect a small part of the LDC, the rest of the economy may not feel any of its effects. – A civil war may be necessary to embrace political change in an LDC to topple a dictator. After the civil war has finished, a democratic government can be elected and the LDC can develop. After Uganda’s Idi Amin was toppled in 1979, Yoweri Museveni came to power and helped to reduce illiteracy and AIDS. – Maybe other factors are more important development constraints.

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