Sound economic policies can help prevent conflict and create large cost savings

Macroeconomic policy can play a key role in preventing armed conflict, in turn saving lives and avoiding injuries, forced displacement and migration, and vast damage to the economy.

That’s according to new IMF research, based on policy simulations incorporating machine learning-based predictions of conflict. The paper finds that every $1 invested in prevention—through policy efforts to promote macroeconomic stability and growth, strengthen institutions, and support local community development—can save between $26 and $103 in possible conflict-related costs. These include the cost of massive humanitarian needs as well as lost economic output.

As the Chart of the Week shows, those savings are particularly notable in high-risk countries suffering from recent violence.

See the full article here.