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Violence cost the world $14.3 trillion in 2016—who’s picking up the bill?

Image credit: United Nations Photo (Flickr: Creative Commons)

We all are. Governments continue to funnel a seemingly endless stream of money into treating the symptoms of violence rather than investing in sustainable measures that enhance peace. This inefficient public spending misdirects funds that could be otherwise spent on improving health and education systems.

Over the past decade, the world has become a less peaceful place. This statement may seem self-evident to some. As we turn on our televisions or scroll through social media feeds, we are flooded by disturbing and brutal images of violent conflict and the spillover effects of the wars besieging numerous countries around the world. We in turn have become collectively desensitised to the state of the world—vulnerable to the idea that the world is a dangerous, scary place and there is little that can be done it save it. That is not the case.

Violence has its obvious impact. The most obvious being the associated human suffering, not only in the lives lost, but also the reverberated effects on those left in the wake of destruction. People are left homeless, injured and mentally scarred. Infrastructure is ruined, government services collapse, and productivity and economies are brought to a halt—thoroughly quashing the myth that war is good for the economy. While the physical, emotional and societal benefits that would result from improvements in peace are clear, continually, the potential economic benefits of peace are overlooked in economic debates.

According to a recent study performed by the Institute for Economics and Peace (IEP), the global economic impact of violence reached $14.3 trillion PPP* in 2016, equivalent to 12.6% of global GDP, or a little under $2,000 for every single person on earth. It would be unwise to ignore the opportunity to reduce this enormous figure. In fact, a mere 10% reduction in violence would not only save lives, but it would generate $1.43 trillion in spare economic resources and activity—a figure equivalent to the flow of Australia’s entire GDP.

Each year, IEP publishes the Global Peace Index, providing an update of the figures representing the economic impact of violence and conflict. This year showed a small reduction from the previous year, but this is no reason to become complacent. The fact remains that each year, the world squanders resources on violence.

Consider that if this 10% reduction in violence were transferred into increased commitment to Official Development Assistance, it would result in 10 times more money being directed from wealthy to poor countries, addressing the immediate needs of millions of people, alleviating poverty and starvation.

The prevention of violence is an essential element to any functioning society. Spending on a police force or on personal security is indeed necessary, while military costs—when used for protection against external threats—are a justifiable expense. However, current spending has tipped the delicate balance—too much or too little spending on containing violence can have negative consequences. In 2016, the world spent only a little more than $40 billion on activities that enforce and encourage peace, a figure which is dwarfed by the total economic impact of violence. A balance can be struck when spending on peacekeeping or peacebuilding is more proportionate to what the world spends on containing violence. Some investments are more productive than others. If we can reduce the amount of money invested in violence and redirect it towards initiatives that sustain peace, then this would lead to a virtuous cycle of less violence and stronger economies.

Tessa Butler is the Communications and Outreach Specialist at the Institute for Economics and Peace.

* Purchasing Power Parity (PPP) is an economic theory that compares different countries' currencies through a market "basket of goods" approach. According to this concept, two currencies are in equilibrium or at par when a market basket of goods (taking into account the

exchange rate) is priced the same in both countries.

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