Transcript Economic Impact of Peacekeeping - Crawford School of Public Policy

Economic Impact of
Peacekeeping
Michael Carnahan
Sponsors
Background
• United Nations peacekeeping missions
spend around $5b per year
• They are often criticised for distorting
the local economy
• Nearly everyone has an opinion
– But nobody has done any analysis
Purpose of Project
• Fill this gap in understanding
• Provide information – to inform choices
• Identify win-win recommendations
• Allow informed trade-offs to be made
Research Approach
• Obtain information from UN HQ
• Field visits to eight active missions
• Follow the trail of the money
– How much actually lands
– How much actually stays
• Assess broader economic impacts
• Make recommendations
Limits of the approach
• Only looked at UN peacekeeping
missions
– Not the broader ‘development community’
• So only a part of the impact was
covered
– Need to start somewhere in a
comprehensive manner
– As first major actor UN sets precedents
Basic Conclusions
• Restoration of peace is the key
• Spending by missions and staff
provides an economic boost
• Inflation is not as bad as perceived
• Labor market effects and other
negatives
• Room to improve local impact
Figure 1.1: GDP per capita, Noting Year of Effective
Deployment of Peace Operations
1800
1600
1400
1200
Burundi
DRC
1000
Côte d'Ivoire
Haiti
Sierra Leone
800
Liberia
Kosovo
600
400
200
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Figure 2.1: Inflation Rates
During United Nations Mission Tenure
35
30
25
20
Burundi
Kosovo
15
Liberia
Côte d'Ivoire
Haiti
10
Sierra Leone
Timor-Leste
5
0
-5
-10
2000
2001
2002
2003
2004
2005
Fiscal Impact
• Assessed budget
– Less external spending
– Less funds not spent
– Less spending leaked into imports
– Equals local spending
• Multiplier effect
Fiscal Impact – data
• UN budget reports
– Supporting material (procurement, staffing)
– MSA survey
• Bank/Fund reports/data
• Government data
• Commissioned research
– Spending surveys
– Housing and business surveys
Table 2.1: Total, External, and Estimated
Local Expenditure ($US ‘000)
UNMIK
UNTAET
UNAMSIL
UNMIL
ONUCI
Kosovo
Timor
Sierra Leone
Liberia
Cote-d’Ivoire
2001-02
2001-02
2001-02
2004-05
2004-05
Total Spending
360,248
527,585
617,646
722,634
378,473
External Impact
262,842
501,284
602,804
693,992
351,037
external spending
164,057
424,547
549,313
598,353
306,232
allowances not spent
63,828
37,871
18,411
34,063
11,806
spending on imports
34,957
38,866
35,080
61,575
32,999
Local Impact
97,406
26,301
14,843
28,642
27,436
Local Percentage
27.0%
5.0%
2.4%
4.0%
7.2%
ONUB
MONUC
MINUSTAH
UNTAC
Burundi
DRC
Haiti
Cambodia
2004-05
2004-05
2004-05
1992-93
Total Spending
329,714
954,766
379,047
1,142,980
External Impact
299,561
884,032
346,941
1,080,146
external spending
235,445
696,257
257,226
853,432
allowances not spent
8,036
44,984
15,132
71,944
spending on imports
56,080
142,790
74,582
154,769
30,153
70,734
32,106
62,834
9.1%
7.4%
8.5%
5.5%
Local Impact
Local Percentage
Figure 2.2: Mission Expenditures by Category,
Sorted by Percentage Local Impact
100%
90%
80%
70%
60%
external impact
unspent allowances
imports
local impact
50%
40%
30%
20%
10%
0%
UNAMSIL
UNMIL
UNTAET
UNTAC
ONUCI
MONUC
MINUSTAH
ONUB
UNMIK
Figure 2.3: Estimated Local Impact as a Share of GDP
12%
10%
8%
6%
4%
2%
0%
ONUCI
MINUSTAH
MONUC
UNAMSIL
UNTAC
UNMIK
ONUB
UNMIL
UNTAET
Figure 2.4: Breakdown of Local Impact
100%
90%
80%
70%
60%
procurement
national staff
allowances
50%
40%
30%
20%
10%
0%
MONUC
UNAMSIL
MINUSTAH
UNMIL
ONUB
ONUCI
UNMIK
UNTAC
UNTAET
Allowance Spending
• Accounts for about half of the local impact
– About half is not spent
• Spending categories
– housing (50%);
– food/restaurants (25%)
• Provided incomes and employment
• Triggered localised price rises
• Some ‘boom/bust’, but need to look over
longer horizon
Mission Procurement
• Balance between mission and HQ
procurement
• About 20% stayed in the local economy, the
rest on imported goods
• Supported the construction and contracting
industries
– Brought these out of the informal sector
• Easiest way to increase local impact is to
increase mission procurement
National Staff
• Role and impact of national staff
provoked the strongest responses
• Benefits include
– Cost savings vs international staff
– Direct injection of cash into the economy
– National staff get training
– Increases mission legitimacy?
National Staff
• Significant problems
– Higher pay draws people from the civil
service and private sector
– Skilled staff take unskilled UN jobs
– Mission wages drag up private and public
sector wages
– Mission wages are the focal point for other
actors
Longer term
• Longer term implication of wages policies not
well studied
• Creation of a ‘development sector’
– Entrepreneurs and most talented people work for
development agencies
– So the economy does not grow
– So more aid is needed for longer
– Dynamic effects – eg changes in tertiary sector
Managing labour market impacts
• More use of outsourcing
– Currently used but could be increased
• Revise wage setting procedures
– Principles established 60 years ago when
the UN was a small employer in well
developed labour markets
– Not appropriate for a large (or largest)
employer in poorly developed markets
Unintended Impacts
• Revenue collection
• Expectations for working environment
and living standards
• Broader economic impact of policy
decisions
• Planning horizons
• Distributional impact
Recommendations
•
•
•
•
•
•
Mandate and structure (GA/SC)
Labour market (ICSC/GA)
Outsourcing (5th Committee/GA)
Administrative changes (Secretariat)
Donor programs (donors)
Implementation (Secretariat)