Development, 2014, 57(1), (64–70) © 2014 Society for International Development 1011-6370/14 www.sidint.net/development/

Dialogue

Shared Societies and Peace: The ends and means of development STEVE KILLELEA

ABSTRACT There is little doubt that peace brings more economic benefits to a society than violence or war. Yet the value of peace to the world economy is poorly understood, with the overwhelming emphasis within peace and conflict studies being placed on understanding the causes of war or violence. Recognizing this, the Institute for Economics of Peace undertook an extensive analysis of a range of indices, data sets and attitudinal surveys in conjunction with current thinking about what drives peace, resilience and conflict to investigate the characteristics of more peaceful societies. Results of the analysis suggested that eight mutually reinforcing and interdependent characteristics tended to be associated with peace. Countries that exhibited these characteristics also tended to be more resilient, have more stable business environments, experience stronger economic growth and achieve greater human development. KEYWORDS business and peace; peace and development; pillars of peace; economics of peace; shared societies

Introduction The Institute for Economics and Peace (IEP) (2013a) recently released the ‘Pillars of Peace’, a ground-breaking study using ‘big data’ statistical techniques to determine the attitudes, institutions and structures that create and sustain peaceful societies. This can be termed ‘Positive Peace’. What was striking about the results of the study was the role that inclusion and shared values played within the context of fostering peace. The output of the research identified eight mutually dependent factors and characteristics (hereafter referred as pillars): well-functioning government, acceptance of the rights of others, sound business environment, equitable distribution of resources, low levels of corruption, free flow of information, high levels of human capital and good relations with neighbours. These characteristics were found to be interdependent, systemic and mutually reinforcing of one another. These Pillars act as a system, interacting with each other and also reinforcing one another, and therefore the strength of each of them is important. Moreover, it was found that nations with stronger pillars also tend to have characteristics similar to those envisioned by the Club de Madrid’s ‘Shared Societies’ Development (2014) 57(1), 64–70. doi:10.1057/dev.2014.28

Killelea: Shared Societies and Peace agenda, with many of the ‘Pillars of Peace’ being vital for building societies that are socially cohesive, stable and safe. The Club de Madrid’s (2011) Shared Societies agenda offers a specific approach to achieving social cohesion based on mutual respect for the dignity of each individual and therefore aims to build societies in which ‘people hold an equal capacity to participate in, and benefit from, economic, political and social opportunities regardless of race, ethnicity, religion, language and other attributes, and where, as a consequence, relations between the groups are peaceful …’. Although it is clear that peaceful, democratic and prosperous societies are desirable in their own right, IEP research has consistently shown that the benefits extend well beyond this, with more peaceful societies experiencing higher economic growth, having a more stable business environment and being more resilient. However, perhaps most critically, there is clear evidence that peace is in itself a pre-requisite for achieving the economic and social development that people desire.

The pillars of peace and shared societies Peace can be viewed through both negative and positive lens. ‘Negative peace’, which is the absence of violence or fear of violence, is the definition of peace which is used to create the Global Peace Index (GPI), while ‘positive peace’ goes beyond it to define attitudes, institutions and structures, that, when strengthened, lead to a more harmonious and peaceful society. The Pillars of Peace study describe the key attitudes, institutions and structures that underpin peaceful societies. In developing this framework, IEP drew on a range of research and data sources including over 4,700 different indices, data sets and attitudinal surveys in conjunction with current thinking about what drives peace, resilience and conflict. From this analysis it was determined that more peaceful societies tended to share eight key characteristics or ‘Pillars’ (Figure 1): ● ● ●

a well-functioning government a sound business environment; an equitable distribution of resources;

● ● ● ● ●

the acceptance of the rights of others; good relations with neighbours; a high level of human capital; free flow of information; and, low levels of corruption.

Well-functioning government Well-functioning government can be broken down into three key domains: government’s effectiveness, the rule of law and voice and accountability. Government’s effectiveness refers to the ability to provide public goods and services, including the implementation of policy, the overall political culture and the management of the natural environment. Rule of law relates to the fairness and efficacy of a nation’s justice system or systems, including customary processes that are practiced in many parts of the world. This includes the legal regulation of the press, the extent of due process and the degree to which government powers are limited by the legal system. Finally, voice and accountability focuses on the connection of government with the wider population and includes factors such as the extent of civil liberties and the government’s accountability to the wider society.

Good Relations With Neighbours

Low Levels of Corruption

WellFunctioning Government Equitable Distribution of Resources

Peace

Free Flow of Information

Sound Business Environment

Acceptance of the Rights of Others

High Level of Human Capital

Figure 1: The Pillars of Peace Note: The Pillars of Peace describes the key attitudes and institutions that underpin more peaceful societies. Source: IEP (2013a)

65

Development 57(1): Dialogue A sound business environment A sound business environment is crucial to peace. Business provides employment, which is instrumental in ensuring a viable taxation base, promoting the productive use of human capital as well as providing individuals with access to financial capital. Communities that are prosperous also tend have lower levels of social tension and a greater capacity to help others. An equitable distribution of resources Equity describes the extent to which individuals and groups are treated fairly, regardless of their personal characteristics such as their social position, race, religion or gender. How resources and opportunities are distributed throughout a society may define how easily an individual or group accesses a range of vital goods and services such as land, water, education, health care and justice, all of which are important contributors to human development. As the interpretation of the term ‘equitable’ will vary from country to country, what is considered equitable in one country may not be acceptable in another.

IEP’s approach considers the definition in its wider context to not only include education but also health, as both factors play an important role in determining the potential economic and social contribution of each individual. An acceptance of the rights of others Acceptance of the rights of others is a category designed to include both the formal institutions that ensure basic rights and freedoms as well as the informal social and cultural norms that relate to the behaviours of citizens. These factors relate to tolerance between different genders and ethnic, linguistic, religious and socio-economic groups within a country. Low levels of corruption Corruption describes the abuse of a position to gain undue advantage. This might occur through a range of channels, such as through government, business or community relationships. Corruption may also result in the generation of wider community tensions, thereby undermining peaceful relations. Corruption within the police, judiciary and military involves significant implications on peace.

Free flow of information The free flow of information is essential to a wellinformed society. Accurate and well-distributed information underpins the free market, improves human capital, provides transparency of government decisions and improves judicial and governmental processes. This Pillar describes how easily citizens can gain access to information, including whether the media is free and independent, the extent to which citizens are informed and engaged in the political process and the different ways in which information can be accessed, and the ability to express political views. A high level of human capital

66

Human capital describes a country’s stock of skills, knowledge and behaviours. While the concept of human capital is sometimes narrowly defined as the economic benefits associated with education,

Good relations with neighbours The good relations with neighbours Pillar not only refers to the relationship between states, but also encapsulates relations between ethnicities, religious groups and others. The Pillar measures the quality of relationships between the constituent groups within the country as well as those with the neighbouring countries. Together, these eight Pillars were found to be associated with peaceful environments and are both inter-dependent and mutually reinforcing, such that improvements in one factor tend to strengthen others and vice versa. The Pillars are viewed as a system and individual causality is very difficult to predict, consequently it is necessary to strengthen the overall system in order to build peace and resilience. Peaceful nations are also better equipped through their attitudes, institutions and structures

Killelea: Shared Societies and Peace to respond to external shocks, thereby influencing and enhancing resilience. In fact, analysis by IEP has clearly suggested that the strength of a country’s Pillars also have lasting implications for a country’s chance of achieving peace in the future. This has been illustrated in Figure 2, where it can be seen that countries with stronger Pillars also experienced more peaceful outcomes. As can be seen in Figure 2, the countries which experienced the largest deteriorations in their GPI scores are also those which had the weakest pillars.

Peace and shared societies: an economic imperative Although the argument for building a shared and peaceful society seems obvious, a range of research by IEP has found there is also a strong economic argument for building peace as it encourages higher economic growth, greater stability and higher percapita incomes. This was amply demonstrated as part of IEP’s (2014) research on understanding the

economics of peace in the recently released report The Economic Cost of Violence Containment. IEP has developed a unique framework that estimates the cost of violence for 162 countries, covering 99.6 percent of the world’s population. This methodology is unique and estimates are made for each country and then added together to provide a global total. The study was conducted by assessing expenditure on economic activity that is related to dealing with the consequences of violence or expenditure aimed at preventing it. The approach used 10 categories from the GPI and 3 additional areas of expenditure to place an economic value on 13 different dimensions. This enabled detailed comparisons to be made between countries at different levels of economic development. Global results of the analysis have been provided in Table 1. As can be clearly seen, the economic impact of violence containment is significant, at US$9.8 trillion (PPP), equivalent to 11 percent of global GDP. To put this in perspective, this figure corresponds to approximately $1,350 per person, and twice the size of Africa’s combined GDP. However, the

Low Levels of Corruption High Levels of Human Capital Free Flow of Information Good Relations with Neighbours Acceptance of the Rights of Others Equitable Distribution of Resources 1%

2%

3%

4%

5%

6%

Change in GPI Score Since 2008 Countries with Stronger Pillars Countries with Weaker Pillars

Figure 2: Stronger pillars lead to more peaceful outcomes Note: Countries that have experienced the lowest declines in peace tend to be those with the strongest Pillars. Source: IEP (2013a)

67

Table 1. Global violence containment costs Violence type Military expenditure Homicides Internal Security Violent crime Private Security Incarceration GDP losses from conflict Deaths from Internal conflict Fear Terrorism UN peacekeeping IDPs and refugees Deaths from external conflict Total (direct only) Total (including 1 for 1 peace multiplier)

Total direct cost ($ Billion) 2,535 720 625 325 315 185 130 30 25 10 5 2 1 4,908 9,816

Cost of Violence Containment (% of GDP)

Development 57(1): Dialogue 30% 25% 20% 15% 10% 5% 0% 1.0

68

2.0

2.5

3.0

Level of Peace (2014 GPI) -

3.5

Low Peace

Figure 3: Costs of violence and peace (R = 0.64) Note: More peaceful nations reap an economic dividend. Source: IEP (2014)

Reduced violence containment expenditure

Source: IEP (2014).

burden of these costs is not equally borne globally as nations that are less peaceful suffer disproportionately from the economic drag of violence and the fear of violence, as illustrated in Figure 3. When the economic effects of dealing with violence are compared against how peaceful a country is, there is a clear tendency for less peaceful nations to spend disproportionately more on violence containment. This powerfully illustrates the potential economic dividends that can be achieved through policies that help achieve a peaceful and prosperous society as envisioned by the Club de Madrid’s ‘Shared Societies’ project. The relevance of this work has never been greater as government spending becomes more constrained, necessitating a sharper focus on the costs and benefits of public programmes. Under these conditions, programmes that alleviate the need to contain violence become more economically viable, making the case for peace even stronger. Clearly pursuing violence alleviating programmes also has many positive spin-off effects such as encouraging education, better health and a more competitive business environment, which in turn helps improve social cohesion and human

1.5

High Peace -

Greater wellbeing and lower expenditure on violence containment

Invest in the institutions which encourage peace

Increased productivity and reductions in violence

Figure 4: The economic dividends of peace and shared societies Note: Investing in peace can pay clear economic dividends. Source: IEP (2014)

capital. This then helps in reducing the need for policing, the judiciary and incarceration, as well as increasing labour market productivity and tax income. This mutually reinforcing cycle of peace and prosperity has been illustrated in more detail in Figure 4.

Killelea: Shared Societies and Peace Although the findings provide a powerful illustration of the extent of economic activity related to violence, one of the most important insights is the benefits that could be obtained through governments targeting policies that build Positive Peace. Not only excess expenditure in areas such as the military is fundamentally unproductive, but by freeing up these resources more can be invested in activities such as health, education and infrastructure that encourage economic growth and improve well-being.

Peace and shared societies: the ends and means of development On a larger scale, violence and the fear of violence are also likely to significantly alter the incentives influencing households and businesses. In fact, evidence suggests that the fear of violence alone is enough to impede innovation and employment creation through discouraging investment and the formation of mutually beneficial business relationships. Hiatt and Sine (2013) followed 730 new business ventures to determine how they were impacted by political and civil violence. Their research found that higher levels of violence reduce the success and survival of companies as well as discourage longer-term strategic planning.

Such evidence clearly suggests that peace is a powerful policy lever for achieving greater growth, innovation and productivity. This was demonstrated in a more detailed report by IEP (2013b) as part of the 2013 Mexico Peace Index that found that not only were the direct costs of violence significant, accounting for more than 3.8 percent of GDP, but that states in Mexico that were more peaceful in 2003 experienced 20 percent higher GDP growth a decade late. In fact, a detailed study suggested that countries with high levels of social trust and cohesion experienced increases in GDP that were almost 20 percent higher than their peers (Foa and Jorgensen, 2008). Globally this has also been found to hold, with IEP analysis suggesting that over the long term those countries that improve peace also tend to achieve higher economic growth. There is also clear evidence to suggest that the benefits of investing in peace also extent to wider development outcomes, with analysis by IEP suggesting that those countries who have been most successful in achieving development goals are those that were more peaceful. This has been illustrated in Figure 5. The UN is currently defining its post-2015 development agenda. It is exciting to see that the global consultation on future development goals is

Figure 5: Millennium Development Goals (MDGs) achievement and peace Note: More peaceful nations have tended to been more successful in achieving the MDGs. Source: IEP and Centre for Global Development

69

Development 57(1): Dialogue recognizing the strong link between peace and shared societies.

Conclusion Economic development, business and peace are clearly interlinked. There is little doubt that peace creates more economic benefits to a society than violence or war. Peace is conducive to business and locations with minimal violence are attractive to business investors. At the same time, business can play a decisive role in building and strengthening global peace through job and wealth creation. Yet the value of peace to the world economy is poorly understood, while the overwhelming emphasis within peace and conflict studies is placed on understanding the causes of war or violence. Recognizing this, IEP has dedicated itself to influencing the debate in order to go beyond the understanding of conflict and rather promote the conditions that create lasting peace. The latter is much more than the absence of war and what it takes to build lasting peace is very different to what it takes to stop conflict. This is a fundamental paradigm shift in our approach to building peaceful societies. The Pillars of Pillars were found to be both interdependent and mutually reinforcing, such that strengthening one Pillar would help reinforce the others. They can be seen as interconnected and interacting in varied and complex ways, forming either virtuous circles of peace building or vicious circles of destruction, with causality running in either direction depending on individual circumstances.

The attitudes, institutions and structures outlined by the Pillars also create resilient societies, enabling nations to overcome adversity and resolve internal economic, cultural and political conflict through peaceful means. Such societies are better able to absorb shocks such as Iceland during the Global Financial Crisis and Japan after the 2011 Tsunami. The successful recovery programmes would have been much more difficult to implement in societies that did not have common values and respect for human dignity. Although societies that are peaceful, socially cohesive, stable and safe are undeniably worthwhile, they also make economic sense, with research by IEP consistently finding that more peaceful societies are also more prosperous. In fact, the economic impact of violence and the fear of violence are considered on a global scale to be equivalent to $9.8 trillion, or 11 percent of global GDP. Although it might be utopian to expect a world free of violence, peace clearly makes economic sense (IEP, 2014). The pivotal role of peace in encouraging prosperity extends to broader social outcomes such as education, health and overall well-being. This has been amply demonstrated as part of IEP’s engagement with discussions around the Post-2015 Development Agenda, with clear evidence that those countries that have been most successful in achieving development goals are those who were more peaceful, providing a clear indication that peace is not just an end, but a pre-requisite for development.

References

70

Club de Madrid (2011) The Shared Societies Project: Policy perspectives on the Economics of the Shared Societies, Madrid, Spain, http://www.clubmadrid.org, accessed 10 February 2014. Foa, Roberto and Steen Lau Jorgensen (2008) ‘Defusing Collective Violence: The economic arguments’, in Clem McCartney (ed.) The Shared Societies Project Background Papers: Responding to Social Cohesion Challenges. Madrid, Spain: Club de Madrid, Shared Societies Project. Hiatt, Shon and Wesley Sine (2013) ‘Clear and Present Danger: Planning and new venture survival amid political and civil violence’, Strategic Management Journal 35(5): 773–785. Institute for Economics and Peace (IEP) (2013a) The Pillars of Peace. Sydney, Australia: Institute for Economics and Peace (IEP). Institute for Economics and Peace (IEP) (2013b) The Mexico Peace Index. Sydney, Australia: Institute for Economics and Peace (IEP). Institute for Economics and Peace (IEP) (2014) The Economic Cost of Violence Containment. Sydney, Australia: Institute for Economics and Peace (IEP).