A Methodology for the Calculation of the Global Economic Costs of Conflict

There is a substantial body of research on the calculation of the costs of conflict, but so far no satisfactory methodology has been proposed that is able to combine all potential channels in one single analysis. This chapter uses the existing literature and its problems to propose a methodology for doing so.

The specific problems addressed in this study include the measurement of welfare, the imputation of missing data, the validity of the econometric techniques used in the estimation of conflict costs, the differentiation of existing conflict databases, and the possibility of both direct and nondirect effects. These challenges are described in detail in this chapter and a comprehensive methodological road map is proposed to be able to estimate the global economic costs of conflict. This contribution is an important continuation of our research agenda with regard to the calculation of the global economic costs of conflict.