Economic Reconstruction of War-Torn Countries:

With the end of the Cold War, a large number of countries in the developing world emerged from civil conflict or another form of chaos in the early 1990s. While Cold War related conflicts winded down, a number of ethnic conflicts erupted, and several military interventions took place. Interventions were justified either for humanitarian purposes, as in the Balkans and several countries in Africa, or for regime change as in Haiti, Afghanistan, and Iraq. A few of these countries have succeeded in constructing a fragile peace and embark on what is often a complex and challenging multipronged war-to-peace transition: from conflict and violence to peace and improved security; from one-party totalitarian rule to a participatory political system based on democratic principles, the rule of law, and respect for human rights; from ideological, ethnic, religious, tribal, or class confrontation to national reconciliation so that people can live again with each other; and from war-torn economies, weak macroeconomic policies, and large imbalances to “post-conflict economic reconstruction.” This essay uses the term “reconstruction” in a broad sense to include everything necessary in the transition from war to peace to reactivate employment in the short-term and set the bases for what Nobel Laureate Edmund S. Phelps refers to as the “good economy,” that is, an economy that is both dynamic and inclusive.