Travails of Conflict and Economic Development in Syria

Abstract

ABSTRACT The war that engulfed Syria in March 2011 is considered to be the most destructive event in its modern history. In addition to the massive human losses and millions displaced, physical capital stock and trade losses are comprehensive; by 2019, the United Nations estimated conflict-related damage to physical capital at US$442.2 billion (infrastructure destruction estimated at US$120 billion); and trade witnessed a collapse of about 100% in just a decade. The study focuses on the impact of the conflict on capital and trade and their specificity in a “multipolar” world to a small but “node” country like Syria. Using the error correction model, findings supported the view that (1) underdevelopment is linked to persistent and widespread international and regional intervention and economic sanctions; (2) political and geopolitical factors are highly associated with the state’s capacity to raise investment and trade volume. Further, the study pointed out the importance of both public capital and trade in growth in the pre-conflict phase, but not the private capital. Recovery and reconstruction are possible only with relative peace drawn by political settlement between the dominant and contending parties in the geopolitical context.