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UN Peacekeeping Operations Department of Economics Uppsala University Bachelor Thesis (15 credits) Authors: Elsa Hellgren & Frida Pamliden Supervisor: Per Engström Spring 2021 UN Peacekeeping Operations How do UN peacekeeping missions affect the host country’s economy? Abstract In this thesis we aim to examine the economic impact of peacekeeping provided by the United Nations (UN) in conflict-affected countries around the globe. The main interest of this thesis is to estimate the possible economic impact that UN peacekeeping operations may have had on conflict-affected countries’ economies between 1989-2019. We aim to do this by investigating if there is a positive causal relationship between UN peacekeeping operation (PKO) and GDP/capita. This is done by examining previous research and conducting an empirical analysis using a difference-in-differences method. Our model examines the change in GDP/capita levels for both a treatment and non-treatment group, defining PKO as treatment. Data on the conflicts, UN peacekeeping operations and other relevant variables was collected from well-established open sources. The results imply that PKO has a positive impact on GDP/capita development, but that the effect most likely goes through the effect that PKO has on our mediator variables, that in turn positively affect GDP levels. Furthermore, our results indicate that the size of the mission, in terms of military strength, does seem to increase the economic effect. Keywords: United Nations, peacekeeping, economic development, GDP/capita, conflict Table of Contents 1. Introduction .......................................................................................................................... 1 1.2 Disposition ....................................................................................................................... 3 2. Theory ................................................................................................................................... 3 2.1 UN Peacekeeping Operations ........................................................................................... 3 2.1.1 Previous Research on Conflict and PKO ................................................................................ 4 2.2 Determinants of Economic Growth .................................................................................. 7 2.2.1 Neoclassical Growth Theory .................................................................................................. 7 2.2.2 Endogenous Growth Theory ................................................................................................... 8 2.2.3 Previous Research on Economic Growth ............................................................................... 8 2.3 Summary of Previous Research and Hypotheses ............................................................. 9 3. Data ...................................................................................................................................... 10 3.1 Delimitations .................................................................................................................. 10 3.1.1 Countries and Conflicts ........................................................................................................ 10 3.1.2 Time Period ........................................................................................................................... 11 3.2 Descriptive Data and Variables ...................................................................................... 12 3.2.1 The Independent Variable ..................................................................................................... 15 3.2.2 The Dependent Variable ....................................................................................................... 16 3.2.3 Correlation Matrix ................................................................................................................ 16 3.2.4 Mediator Variables ............................................................................................................... 17 4. Methodology ....................................................................................................................... 18 4.1 Method ........................................................................................................................... 18 4.2 Empirical Specification .................................................................................................. 19 4.3 Threats to Identification ................................................................................................. 20 5. Analysis ............................................................................................................................... 23 5.1 Descriptive Analysis ...................................................................................................... 23 5.2 Regression Results ......................................................................................................... 26 5.3 Sensitivity Analysis ........................................................................................................ 29 5.3.1 Controlling for Initial GDP/capita Levels ............................................................................ 29 5.3.2 Redefining the Time Variable ............................................................................................... 30 5.3.3 Redefining the PKO Variable ............................................................................................... 31 6. Discussion and Conclusions ............................................................................................... 32 7. BiBliography ....................................................................................................................... 35 8. Appendix ............................................................................................................................. 37 Appendix A – Observed Conflicts ....................................................................................... 37 Appendix B – Conflicts Examined in DiD Graph ................................................................ 40 Appendix C – Peacekeeping Operations .............................................................................. 41 Appendix D – Formal Test for Parallel Trends .................................................................... 42 Appendix E – Sensitivity Analysis ....................................................................................... 42 Appendix F – Initial Values ................................................................................................. 48 1. Introduction Why do some conflicted-afflicted economies recover faster than others? The UN is commonly seen as a multilateral actor within peace restoring operations, but are UN peacekeeping operations (PKO) an effective tool to dampen or reverse the negative economic consequences caused by conflict? That conflict has an impact on a country’s economy is an established fact within peace and conflict research. The magnitude of the impacts often depends on two key dimensions; the duration and the intensity of the conflict. The decline in GDP/capita associated with conflict is in certain cases very dramatic resulting in a long period of economic rehabilitation. The total cost of conflict is a combination between the severe decline in GDP/capita and the duration of the economic damage (Mueller & Tobias, 2016). Hence, securing peace is presumably important for economic development. UN peacekeeping operations have been deployed to conflict-affiliated regions with the intention of restoring peace and enabling a positive development in host-countries for decades, but their effectiveness has recently been questioned. The UN received sharp criticism regarding their work within peacekeeping operations during the 1990s, which has led to a continuous evaluation of their effectiveness. The debate is still ongoing today with concerns about the UN’s ability to protect civilians, to which extent they regard national interests and the inefficiency within the chain of command regarding the ability to act quickly (FOI, 2014; Oladipo, 2017). In 2018 the UN launched the Action for peacekeeping (A4P) reform to engage member states further and improve the quality of the operations (UN, 2021a). The heightened interest in PKO can also be detected in the research community during the past couple of years. UN peacekeeping operations have been studied by many researchers within different research fields, but a surprisingly small share of the research is focused on the impact on economic development. Instead, most of the published articles focus on whether PKO is an effective tool in dampening conflict. In order to improve the work of reforming peacekeeping, the post-conflict consequences in the conflict-affiliated country needs to undergo a higher degree of evaluation. Economic development has been found to be key in preventing the recurrence of conflicts and improving the quality of life for residents 1 (Humphreys, 2003). Therefore, how PKOs impact the host-economy is a relevant perspective that the UN should take into consideration if they work to reform and improve their peacekeeping operations. We seek to analyze the economic impact, in terms of GDP/capita, of peacekeeping in conflict-affected countries around the globe. Many peacekeeping operations have taken place in countries that have undergone democratization processes during the past decades. The level of GDP/capita
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