Edited by William F. Shughart II, Laura Razzolini and Michael Reksulak
Violent conflict is extraordinarily costly. Causing immense human suffering, loss of life, internal displacement, and destruction of resources, war is effectively ‘development in reverse’ (Collier et al. 2003). Given its social welfare consequences, the emergence of conflict should be seen as a puzzle to many observers. Yet from a political economy perspective, in order for conflict to occur, one (or more) political actor(s) must expect that the benefits of entering into conflict exceed the costs. Understanding why this calculus would tip in favor of conflict is the central question in the study of the political economy of war and peace. The tools of public choice economics can be applied to highlight the logic of conflict and political violence. By analyzing the incentives, opportunities, and constraints facing different political actors (for example, government officials, rebels, military officers, insurgents, terrorists, diplomats, and even the occasional firm), we can begin to understand why conflict occurs. This chapter therefore places primary emphasis on the roles of constitutions, governance, legal systems, and bureaucracies because these institutional factors influence the incentives, opportunities, and constraints that political actors face. Consider, for instance, that weak legal institutions may preclude the resolution of disputes through legitimate means or may not allow for the impartial enforcement of contracts. Poor political institutions (or ‘bad governance’) can hamper the ability of political actors credibly to commit to peace negotiations, providing a rationalist explanation for the emergence of conflict (Fearon 1995).
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