New report shows the global economic cost of violence is at its highest level on record

The impact of homicides and interpersonal violence is equivalent to one-fifth of the global economic cost of violence.

Today the Institute of Economics and Peace released its annual Economic Value of Peace report showing the global cost of violence is at its highest level on record at $14.8 trillion in 2017, or 12.4 per cent of global Gross Domestic Product (GDP). A staggering figure, it is equivalent to $1,988 for every person in the world.

The rising cost of violence is associated with recent conflicts and acts of terror in the Middle East, Africa and Ukraine. Since the Arab Spring events of 2011, Syria, Yemen, Libya, Egypt and Bahrain continue to experience civil war or internal turmoil. The surge of the Islamic State in Iraq and Syria and of Boko Haram in Cameroon, Chad, Niger and Nigeria have also contributed to the increase in the cost of violence. The outbreak of wars in South Sudan in 2013 and in Ukraine in 2014 and a relapse of conflict in the Central African Republic in 2012 additionally played a part.

Since 2012, the economic cost of violence has risen 16 per cent, mainly due to an increase in spending on internal security and conflicts, with military expenditure prevailing as the overriding cost. Combined military and internal security spending cover nearly two-thirds of the cost of violence.

The United States spends the most on its military, totalling $740 billion for 2017 alone, which includes the costs of its Department of Defence and Department of Veteran’s Affairs. China, the country with the second largest military expenditure, spent slightly over half of that amount at $411 billion in 2017. China’s s high-level ranking follows increasing military and security funding over the last decade. Looking at military expenditure as a percentage of GDP, the Middle East and North Africa region contains eight of the ten countries spending the largest amounts, a result of both their governance structures and the regional security situations.

Developing countries have been driving a dramatic increase in internal security spending over the last decade, a figure that has risen from $467 billion in 2007 to $524 billion in 2017. While internal security spending has remained relatively consistent in advanced economies, non-OECD countries boasting high incomes, such as the Gulf states, are spending the most on internal security. These countries are spending nearly $1,500 per person on internal security, over twenty times what low-income countries spend. Afghanistan ranks as the highest internal security spender, with costs amounting to 15 per cent of its GDP. This figure covers the bills for police, prison services and the judicial system, much of which is funded by the international community in an attempt to build security institutions and create stability in the country.


The impact of homicides and interpersonal violence is equivalent to one-fifth of the global economic cost of violence. The Latin American and the Caribbean, South American and sub-Saharan African regions contain a disproportionate amount of countries severely affected by interpersonal violence. In El Salvador, the cost of homicide and interpersonal violence is just under half of its GDP, reflecting the effects of local gang violence and related homicides. Guatemala and Honduras similarly face costs greater than ten per cent of their GDPs from the same forms of violence.

Sexual assault and the implications of fear associated with interpersonal violence also have a noteworthy impact. In the Dominican Republic, El Salvador, Gabon and Venezuela, more than two-thirds of their respective populations do not feel safe walking alone at night.  Interpersonal violence numbers, especially relating to sexual assault and domestic violence, are under-reported. It is estimated that in Mexico, for example, only six per cent of these types of crimes are officially reported, reflecting how conservative the report’s figures are in this area.

Most of the global economic cost of violence is associated with conflict and security, yet this does not capture all sources of cost. The $14.8 trillion figure is conservative. Many areas of violence are not included in the assessment due to a lack of reliable data, such as the cost of crime to business or self-directed violence. Cases of domestic violence and sexual assault can often go unreported, providing an incomplete dataset to work with initially. Costs resulting from conflict also do not end when the violence ceases. While the cost from conflict should not be discounted, focusing solely on conflict expenditure hinders the urgency of addressing many other issues, such as the long-term displacement of people and gang violence that is associated with economic costs and disruption.

Mohib Iqbal and Tim Balllesteros

Research Fellow and Research Assistant

Mohib is a Research Fellow at the Institute for Economics and Peace. He is leading the research on Economic Value of Peace, with special focus on cost of violence and the link between armed conflict and economic development. Mohib has worked for the past ten years for USAID, UN agencies, Australian government and Deloitte.

Tim is a fifth-year student at Northeastern University, where he is pursuing degrees in mathematics and political science. His focuses are in peace and conflict studies, with a focus on sub-Saharan Africa and the Balkans. Currently, he is a Research Assistant at the Institute for Economics & Peace, where he has researched conflict relapse.

 

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