Essay --

I have grouped some past literature on the topic and investigations I will be pursuing. Economic growth and how conflict affects GDP per capita growth will be discussed theoretically and through previous empirical analyses. Observations will be made on the assumptions they reach and what they indicate for this paper. 2.1 Economic Growth I first look into the theory and previous studies on economic growth. The reason behind this is to get an idea of what model I will use and which variables to include in my regressions. There have been many empirical studies analysing possible variables which are significant to economic growth. Barro, QJE 1991 uses the neoclassical Solow model (Solow, 1956 and Mankiw et al., 1992) to test for the theory of convergence which states that countries with an initial lower GDP grow more rapidly. This makes economic sense as the country that has been involved in the conflict has a greater amount of growth potential. The country will simply need to recover its lost resources and will fulfil conditional convergence. The neoclassical theory states as a country reaches the steady state an increase in investment will result in diminishing returns on capital. Poor countries, which have lower capital and higher rates of return on capital, will pull alongside to the income levels of rich countries with faster growth rates. As for the variables tested, for 98 countries in the period 1960-1985, the growth rate of GDP per capita is positively related to initial human capital and negatively related to the initial level of real per capita GDP. Growth is inversely related to the share of government consumption in GDP. Growth rates are positively related to measures of political stability and inversely related to a... ...nds. As for the previous empirical studies according to Koubi, there are three different studies conducted on the topic. The existing empirical studies of the relationship between war and economic performance are one of three types: a) Those that study the unconditional relationship between war and economic growth. b) Those that examine the conditional relationship. And c) those that attempt to identify the mechanisms through which war affects economic growth (Koubi, 2002). My particular study focuses more on the first type as I am not particular examining the intensity, duration or severity of war, however focusing on a particular region and the different effects of civil war within the countries and interstate wars within the region. I will also observe previous studies of another topic that may become of interest as my paper progresses, the spill over effect.