Do Conflicts Bring Prosperity?

Paper to be presented at the the Asia-Pacific Economic and Business History Conference, Adelaide, Australia, February 11-13, 2016.  An earlier version was presented at the Vice-Presidential Session of the World Economic History Congress held at Kyoto on August 7, 2015.

This article analyzes a historical-international dataset to estimate the impact of conflicts on growth, capital accumulation, and technological progress.  The impact of conflicts on living standards, estimated using locational information as instruments, was positive and persistent, with wars and rebellions occurring from 1400-1799, as well as from 1800-2000, raising the level of per capita output in 2010, and early modern conflicts accounting for income gaps observed in the early nineteenth century.  The transmission mechanism included both technological progress and accumulation of human capital.  Encouraging saving from 1400-1699, conflicts slowed down physical capital accumulation in the following centuries.