When you regularly buy goods or services, it helps fuel the economy at both the local and national level.
But what if you live in a place like Syria, that is torn apart by a seven-year long civil war?
Aside from the obvious humanitarian costs, these dire circumstances would ultimately change your spending behavior, how businesses operate, and how capital gets utilized. The fact is that conflicts, homicides, terrorism, and other types of violence can hinder productivity and wealth creation, and this ultimately has an impact on families around the world.
CALCULATING AN ECONOMIC IMPACT
In today’s chart, we use data from the Global Peace Index 2018 report, which tries to put a figure on the expenditures and economic effects related to “containing, preventing and dealing with the consequences of violence”.
According to the report, the economic impact of violence to the global economy was $14.76 trillion in 2017 in constant purchasing power parity (PPP) terms. This is roughly 12.4% of world gross domestic product (GDP), or $1,988 per person.
While those figures themselves are quite staggering, how it all breaks down is even more interesting.
VIOLENCE BY TYPE
Violence comes in many forms, so how does factor into the economic impact?
The Institute for Economics and Peace, the non-profit think tank that has authored the report for the last 12 years, breaks down economic impacts as follows:
The vast majority of impact comes from military and security spending, which are both aimed at the prevention or containment of violence. Meanwhile, homicide and conflict – two more direct violent actions – are the next two biggest factors.
