Chapter 2 A method to compute a peace gross world product by country and by economic sector

• Date: 08 July 2010
• Published date: 08 July 2010
• Pages: 13-30
• DOI: https://doi.org/10.1108/S1572-8323(2010)0000014006
• Author: Jurgen Brauer,John Tepper Marlin

CHAPTER 2

A METHOD TO COMPUTE

A PEACE GROSS WORLD

PRODUCT BY COUNTRY

AND BY ECONOMIC SECTOR

Jurgen Brauer and John Tepper Marlin

ABSTRACT

Purpose – The chapter reports on an attempt to compute the size of gross

world product (GWP) under the assumption that all violence ceases.

Methodology/approach – Spreadsheet-based simulations, given seed

values taken from extensive literature review; this is done, for 2007, in

nominal foreign exchange–based US dollars (USD) as well as in

purchasing power parity (ppp)–based dollars (international dollars).

Benef‌icial economic effects from more internal peace (nonviolence

within countries) as well from external peace (nonviolence between and

among countries) are calculated for each of 140 countries. In addition, we

compute sectoral economic effects for the United States.

Findings – For 2007, the simulations suggest that in a state of nonviolence

the world economy could have been larger by 4.8 trillion dollars, or 8.7

per cent of actual GWP, when measured in nominal, foreign exchange–

based USD, or by 6.0 trillion international dollars, or 9.2 per cent of

GWP, when measured in purchasing power parity values.

Economics of War and Peace: Economic, Legal, and Political Perspectives

Contributions to Conf‌lict Management, Peace Economics and Development, Volume 14, 13–30

Copyright r2010 by Emerald Group Publishing Limited

All rights of reproduction in any form reserved

ISSN: 1572-8323/doi:10.1108/S1572-8323(2010)0000014006

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Limitations – The simulations are based on disparate values found in the

literature to seed the spreadsheet calculations; various assumptions are made

that would need to be conf‌irmed through country- and sector-specif‌ic studies.

Practical implications – Knowledge of the potential size of forgone

economic benef‌its due to violence can assist to set out global violence

reduction goals in order to achieve measurable economic results.

Originality/value of chapter – To our knowledge this is the f‌irst attempt

to calculate the size of the worldwide economic benef‌its forgone due to

violence.

INTRODUCTION

This chapter reports on the setup of a spreadsheet-based computational

method to calculate, for 2007, the size of gross world product (GWP) under

the assumption that all violence ceases.

1

Numbers are generated state-by-

state and by economic sector (agriculture, industry, services) within each

state.

2

In addition, a subsector analysis is provided for the United States to

gauge how much money subsectors such as utilities or retail trade or arts,

entertainment and recreation ‘leave on the table’ on account of the GDP-

depressing effects of violence. Further, amounts are computed on how much

GDP by state might rise when either more internal peace or more external

peace (or both) is obtained. The results reported here both abstract from and

expand on a lengthy, publicly available commissioned report the authors

wrote for the Institute for Economics and Peace (IEP), Sydney, Australia.

3

THE PROCESS FOR CALCULATING

A PEACE GROSS WORLD PRODUCT

So as not to mistake, or be misled about, what we claim, it is important

to understand both the conceptual as well as the computational procedure

we employed. Fig. 1 represents the conceptual approach. Viewing violent

behaviour as an individual and social disease, we agree with the World

Health Organization and take a public health view to classify violence into

the rubrics of self-harm, interpersonal violence and collective violence

(WHO, 2002, 2004). In step 1, we reviewed extensively, but selectively, the

disparate and often unconnected literatures on the economic cost these

JURGEN BRAUER AND JOHN TEPPER MARLIN14