The economic cost of conflict: Evidence from South Sudan

This study estimates the output loss in South Sudan as a result of the double shock of the protracted post-independence conflict and macroeconomic crisis. Using the synthetic control method for comparative studies, the analysis suggests that the cumulative loss in the growth rate of real per-capita gross domestic product (GDP) was 69.63% (or a yearly average of 15.65%) over the period 2012-2018. This resulted in an accumulated loss in the real per-capita GDP of US$7,070 (yearly average of US$1,010) and an accumulated loss in the aggregate GDP of US$81.1 billion (yearly average of US$11.6 billion) over the same period. Consequently, South Sudan's real per-capita GDP in 2018 was just a third of what it would have been in the absence of conflict. Moreover, we find that exports and investment were the main channels through which the economy was adversely impacted by the conflict. These results are robust to several placebo and robustness tests. Implications for future research are discussed.