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Report links peace and prosperity

21 June 2019


Iceland, which topped the peace charts

Iceland, which topped the peace charts

THE more peaceful a country is, the more its economy will grow and businesses prosper, a new report argues.

The Business and Peace Report is published by the Institute for Economics and Peace (IEP), a think tank that measures the impact of conflict, says, over the past 60 years, GDP growth has been three times higher in the most peaceful countries than in those experiencing violence and instability.

In addition, inflation is, on average, three times higher and ten times more volatile in the least peaceful countries on earth.

“The major finding of this report is that peace acts as a good predictor of a country’s future performance in a number of macroeconomic indicators,” the report states.

This is an “important but missing step in business analysis”, the authors argue, because, for businesses to play their part in building peace, they must first be convinced that their investments will be boosted by peace.

The assessments in the report are based on the IEP’s Global Peace Index: a list of 163 countries ranked in order of most to least peaceful, based on everything from the number of police officers to relations with neighbouring countries.

The 2019 Index was released this month. It stated that, for the tenth year in a row, Iceland was the world’s most peaceful nation. The UK was ranked 45th: an increase from 50th in the previous year.

Besides showing how beneficial peace is for businesses, the IEP report also says that future economic performance can, in part, be predicted by a country’s growing peacefulness.

Nations that rose up the Global Peace Index in the past decade also showed above-average economic performance, the report says. “Economic performance and peace are often mutually reinforcing. That is, better economic performance assists in building peace, and vice versa. Together they can form a virtuous cycle.”

Therefore, the report argues, investors should look at countries that currently have lower levels of peace as good candidates for investment. More business engagement and spending in these less-developed countries could itself reduce the risk of conflict and instability, which would then lead to economic growth, and therefore better returns on investment.

Britain’s ranking in the Global Peace Index, which has been about 50th for the past decade, is mostly driven by low levels of internal conflict, a small army, little political terror, and good relations with neighbouring nations.

The UK loses points, however, for its nuclear arsenal, large arms-exporting industry, and high perceptions of criminality.

Joining Iceland at the top of the Index are New Zealand, Austria, Portugal, and Denmark. Bhutan has made the greatest improvement of any country in the top 20, rising 43 places in 12 years.

Afghanistan has replaced Syria as the world’s least peaceful nation. They are joined in the bottom five by Iraq, and by South Sudan and Yemen, both of which are experiencing civil war.

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