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the past decade has not been very peaceful. In the current paper, we
try analyzing the economic cost of violence and peace by reviewing the
reports presented by the Institute of Economics and Peace (IEP). Presently,
the Middle East and North Africa are experiencing some severe conflicts.
Even with the presence of UN Security Council, International Criminal
Court and other Instruments of collective action, containment of violence
and establishment of peace is still a hard task and forms of violence like
terrorism, civil wars, homicide and armed conflicts have been on the rise.

Literature Review:
Till date, significant research has been done in the area of war and
peace. Numerous studies have been accomplished regarding state-based
armed conflicts and its cause and effect relation with economics. The
post- Cold War era saw an emergence of research on peace economics.
Charles H. Anderton’s work (Anderton C. H.,2002) that revolves around
the international economic relations and war and the economic activity
in the shadow of conflict focuses on tapping the early reservoirs of works
published by the liberal economists. Today, notable literature exists
explaining the economics of the armed conflicts/ defense economics or
peace economics.
It is apparent that states subjected to armed conflicts are exposed
to all the aftereffects of the same and bear all the costs related to it.
Humphreys (2003), in his attempt to explain the aggregate costs of war,
categorizes the impact of war on the economy. According to his paper,
there is the destruction of physical capital (buildings, bridges, energy and
communication sector infrastructure), reduced investment in physical
capital (especially in the private sector), population levels change (they go
down because of battle deaths, also distorts labor), demolition of human
capital (effect on the efficiency of the labor) and condensed investments
in the same. Apart from this, he considers the structure of economies as
well as all the societal factors- wealth, natural resources and economic
policies- that has an impact on the economy. Humphreys (2003) linked
trade (considered as a part of the economy) to armed conflicts observing
that countries that trade with each other are less likely to go to war. A
similar observation has also been made by Anderton (2002) in his work
where he studies economic interdependence of the states and points out
that states that are dependent on each other for trade are less likely to
go to the war. It is made apparent with the works of Guidolin M. and
Ferrara E.L. (2010) and Schneider G. and Troeger V. E (2006) that the

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