Reorienting Economic Policy for Peacebuilding: Obstacles and Progress

This podcast episode delves into the complex relationship between economic policy and peacebuilding, arguing that while economics can foster peace, it can also inadvertently exacerbate conflict. The central thesis is the urgent need to reorient economic policy towards investing in peace, particularly in post-conflict societies. However, this reorientation faces four significant obstacles: competing objectives of policymakers, flawed performance metrics for aid administrators, deep-seated ideological biases within the economics profession, and the contentious issue of national sovereignty.

The first set of obstacles involves competing objectives, such as geopolitical interests (e.g., Cold War alliances overriding human rights), commercial interests (e.g., securing contracts for donor country firms over local development), and the often-misguided urgency of refugee repatriation. The speaker highlights how rapid repatriation without adequate conditions can reinforce ethnic partitions rather than promote reconciliation. The second obstacle relates to performance evaluation, where aid agencies often prioritize the speed of project completion and money disbursement over the actual long-term impact on peace and stability, thus discouraging necessary conditionalities.

Ideological biases form the third major hurdle. The episode critiques the narrow focus on "efficiency" in economic analysis, which often reduces complex outcomes to monetary metrics, neglects crucial distributional issues (who benefits, who pays), and overlooks non-market values like peace. Furthermore, the "Washington Consensus" or neoliberal antipathy towards tariffs is challenged; tariffs are presented as a potentially vital source of revenue and a tool for protecting vulnerable domestic producers in developing countries, especially against artificially cheap imports.

Finally, the concept of national sovereignty is explored as a fourth obstacle. While governments resist conditions on aid as an infringement on sovereignty, the speaker argues that external assistance itself is an intervention that alters internal power balances and economic functioning, thus already compromising sovereignty. Moreover, "national sovereignty" is often a means, not an end, and can be invoked by rulers to protect their own interests rather than the broader well-being and self-determination of the people. Despite these challenges, the episode concludes on a hopeful note, acknowledging significant progress over the past decades, such as the increased recognition of inequality as a problem and the adoption of conflict sensitivity analysis in aid decision-making, signaling a growing willingness within the economics profession to question conventional wisdom and consider broader impacts beyond mere efficiency and growth.

"economics and economic policy can help to build peace but economic analysis and economic policy can also inadvertently fuel the Flames of War"

"there's a strong case for reorienting economics in order to accept investment in peace as an important and in many cases overriding objective particularly in war foreign societies that are emerging from a protected civil conflict"

"overcoming that pressure to put doing business ahead of doing the right thing is another big obstacle"

"Aid that reinforces de facto partitions among people of the type I've described rather than pushing for reconciliation and reintegration can be part of the problem in the long term rather than part of the solution"

"we need to evaluate outcomes on the basis among other things of their contribu to building a durable peace and not solely on whether we were able to wrap up that loan on schedule"

"the focus on efficiency so-called efficiency completely neglects distributional issues like who gets the money and who Bears the cost"

"tariffs can and should be an important source of Revenue particularly for countries that have low tax coefficients that is to say a low ratio of total government revenue to national income"

"the call that resistance to conditions a defense of national sovereignty is to miss the fact that the sovereignty has already been compromised by the fact that these external resources are coming in"

"National sovereignty is itself a means not an end. It's a means to the advancement of human well-being and self-determination and freedom it's not the end in itself"

"efficiency at the micro level and growth at the macro level sometimes called the size of the economic Pi is not the only consideration that Economist should be taking into account in recommending policies and making decisions"