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This paper analyses the fiscal effects of armed conflict and terrorism on low- and middle-income countries. An analysis of 22 conflict episodes shows that armed conflict is associated with lower growth and higher inflation, and has adverse effects on tax revenues and investment. It also leads to higher government spending on defense, but this tends to be at the expense of macroeconomic stability rather than at the cost of lower spending on education and health. Our econometric estimates are consistent with the hypothesis that conflict and terrorism have a significant negative impact on growth through changes in the composition of government spending. On the revenue side, the fiscal accounts are affected only through reduced real economic activity. Thus there is potential for a sizable "peace dividend" for countries that are able to resolve conflict and terrorism.

Macroeconomics --- Public Finance --- Criminology --- Economic Development: Human Resources --- Human Development --- Income Distribution --- Migration --- Fiscal and Monetary Policy in Development --- Economywide Country Studies: Africa --- National Security and War --- National Government Expenditures and Related Policies: General --- Illegal Behavior and the Enforcement of Law --- Personal Income, Wealth, and Their Distributions --- Public finance & taxation --- Terrorism, armed struggle --- Defense spending --- Terrorism --- Expenditure --- Total expenditures --- Personal income --- Crime --- National accounts --- Expenditures, Public --- Income --- Sri Lanka

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This paper examines past African growth experience and attempts to simulate future ones. In addition to more commonly used determinants of total factor productivity, a measure of the effect of labor reallocation and an index of economic diversification are constructed and included as factors for long-term growth. A simple model is constructed for the purpose of simulating growth scenarios up to the year 2020 for Burkina Faso, Côte d'Ivoire, Ghana, Mali, Tanzania, and Uganda. Even if one makes relatively optimistic assumptions, Africa is not likely to reach "Asian tiger" levels of growth. The results also suggest that growth will depend, to a large extent, on educational investments and productivity gains in agriculture.

Exports and Imports --- Labor --- Macroeconomics --- Production and Operations Management --- Macroeconomic Analyses of Economic Development --- Economic Development: Agriculture --- Natural Resources --- Energy --- Environment --- Other Primary Products --- Industrialization --- Manufacturing and Service Industries --- Choice of Technology --- Economic Development: Human Resources --- Human Development --- Income Distribution --- Migration --- Economywide Country Studies: Africa --- Comparative Studies of Countries --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Labor Economics: General --- Trade: General --- Education: General --- Labour --- income economics --- International economics --- Education --- Human capital --- Total factor productivity --- Exports --- International trade --- Industrial productivity --- Labor economics --- Côte d'Ivoire --- Income economics