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IMPACT OF GLOBAL CONFLICT AND TERRORISM ON SOME SELLECTED MACROECONOMIC VARIABLES: THE CASE OF NIGERIA
Abstract:
Globalization makes societies permeable to global turbulence and raises their vulnerability to transnational public goods that impact them in accordance with available fault lines. Like the recent global financial and economic crises, Nigeria is exposed to global violent conflict, with economic consequences that need to be explored. Assessing these costs is even more pertinent with the increased utilization of terrorism in conflict that increases the economic risks associated with the phenomenon, evidencing from the uniqueness of terrorism: its choice by the weak in the society; its non-exclusiveness and proclivity for targeting large numbers of innocent people (for the purpose of killing or harming them). Obviously, the search for economic truths on violent conflict and Nigeria is necessitated by the persistence and depth of the events over time, along with the paucity of studies devoted to quantitative assessment of economic impact of violent conflict in the country. Nevertheless, dealing with the issue requires an expanded review of conflict literature to clarify unfamiliar concepts, while the application of economic tools extends the discourse beyond the realm of politics, which aid the consideration of violent conflict for optimal policy options in the country. To that extent, a mid-size macro econometric model, estimated and simulated, using a diverse set of data base on global violent conflict and terrorism revealed mixed consequences for global violent conflict and terrorism in Nigeria: domestic conflict are largely negative on the economy, including the direct destruction of productive capital, which tend to widen with the spread of the events across the country; regional conflicts impose fiscal stress on the government in the form of arming that shift resources away from social and economic sectors; transnational conflict and terrorism produce two broad impacts: (1) it influences domestic violent conflict and so reinforces the negative consequences of the events on the economy, and (2) induces foreign exchange inflows through its impact on global oil production and oil price volatility. However, the net impact on the economy depends on the efficiency of domestic economic resource use as well as the strength of domestic institutions for conflict management. While the research outcome is non-supportive of transnational terrorism, which is obviously exogenous to Nigerian system in any case, it nonetheless calls for judicious use of the opportunities that such conflicts bring through effective savings and management of foreign exchange inflow attributable to it. That way, the country is better placed to narrow domestic conditions that could instigate the propagation of domestic violent conflict in the country.
IMPACT OF GLOBAL CONFLICT AND TERRORISM ON SOME SELLECTED MACROECONOMIC VARIABLES: THE CASE OF NIGERIA
