Wars, foodcost and countervailing policies: A panel data approach

Abstract

Withholding food or providing it during a conflict is vital for peace missions and challenges for building sustainable peace. The purpose of this paper is to introduce a new perspective in considering the impact of wars on relative wages in the food sector. We define the foodcost as the share of wages paid to the food sector versus total manufacturing wages. We try to estimate the effect of two types of wars (namely, civil and international wars) on the foodcost and explore the policies that are likely to reduce that cost. We use panel data for 41 countries from 1960 to 1999 to answer these questions. The empirical results show that civil wars positively affect the foodcost, while international wars apparently do not. The policy implication of this analysis is that, in the event of a civil war, policy-makers lack the resources to exert control on a rising foodcost. A rise in the foodcost could be translated into higher food prices or lower purchasing power over food, either of which may have devastating impacts on social and economic well-being. In the event of an international war, as opposed to a civil war, governments have a greater capacity to prioritize and mobilize resources. Therefore, the impact of an international war on the foodcost is positive but weak. The foreign aid remains an effective countervailing tool for reducing the increase in the foodcost.