Global Peace Dividend Could Reach $8 Trillion a Year, Study Says

Reducing prison populations, improving relations with neighboring countries and enhancing the rule of law for local businesses could save countries around the world as much as $8 trillion a year, according to an annual survey of the economics of peace.

Improvements in “peacefulness” -- a measure that includes levels of domestic and international conflict, safety and security -- could create a “dynamic peace dividend” by freeing money now spent on prisons, arms and police, or lost to corruption and poor regulation, according to the Global Peace Index released today. That amounts to as much as $1.8 trillion in the U.S. alone, the study found.

“We have really discovered the eight structures of peace that governments, politicians and policy makers can focus on to become more peaceful and reap the economic benefit,” Clyde McConaghy, board director for the Institute for Economics & Peace in Sydney, which compiles the annual survey.

The most peaceful country in the world in 2011 was Iceland, which had slipped to fourth place in 2009, after the banking system collapsed and the country was beset by political strife, and rose to second place last year. New Zealand, which was first last year, fell to second place in 2011 as its prison population grew and the country hired more police officers, a sign of rising crime.

The most important factor for increasing peacefulness and reaping a peace dividend is a well-functioning government, McConaghy said in an interview from Washington. “It doesn’t particularly matter if it’s democratic or not,” he said.

Key Indicators

The other key indicators are a sound business environment with reasonable regulation and judicial control; low levels of corruption; high levels of education, especially a well- functioning high-school system; good relationships with neighboring countries; an equitable distribution of resources; an acceptance of the rights of others; and a respect for private property.

“There are now specific instructions for a policy that a political leadership can put in place over months and years for a country to be more peaceful,” McConaghy said. “It’s not some airy-fairy thing; it’s attainable in a non-violent, pro-economic growth way.”

He said the Global Peace Index’s authors have been contacted by government delegations from Malaysia, Singapore and Canada, all seeking to improve their country’s ratings.

82 of 153

The United States ranks 82 for 2011, up from 96th place four years ago, McConaghy said. High rates of incarceration and violent crime are preventing the U.S. from reaping its potential peacefulness dividend in economic activity, he said.

McConaghy said that by “reducing incarceration rates” and “redeploying policing and judicial system assets required to support the incarceration rate,” the U.S. could save as much as $360 billion annually.

The Arab Spring protests that overthrew governments in Tunisia and Egypt, and launched crackdowns in Yemen, Bahrain and Syria and a civil war in Libya, prompted the study’s authors to extend the survey from December to March 15. That put Libya, Bahrain and Egypt as the countries whose peacefulness had declined the most of all countries surveyed.

The survey measured 33 indicators across 153 countries, including murder rates, infant mortality, military spending, press freedom, perceptions of criminality, levels of corruption, education and foreign investment flows.

Most Dangerous

The most dangerous country in the world was Somalia, which slipped past Iraq to rank last in the list of 153 countries. Although Somalia is riven by civil war, Islamic insurgency and piracy, its score on the peace index did improve slightly, as the United Nations-backed transitional federal government continued to maintain an uneasy calm in the capital, Mogadishu, with the aid of African Union troops. A peaceful June election in the Somaliland province and a decline in arms spending helped improve the country’s score.

Iraq came next (152) followed by Sudan (151) and Afghanistan (150). Iraq’s peacefulness improved as organized conflict declined, along with the civilian death toll, which dropped to 4,045 civilians killed in 2010 from 4,687 in 2009, according to the website Iraq Body Count.

To contact the reporter on this story: Peter S. Green in New York at psgreen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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