Economic Impacts Of War
1. Massive Military Spending and Fiscal Strain:
Government often spend heavily in defence , weapon and military logistics
This huge military spending can lead to budget deficit and higher national debts. This
Debt can strain public finance , reduce spending on essential services like education
and healthcare and burden the future generation for the repayment of the loan.
2. Disruption of Trade and Production:
War disrupts damages critical infrastructure like road ,bridges thus disrupting the
trade routes and hence the supply chain
War also reduces the skilled workforce through casualties and by displacement to
other countries
These causes disruption of trade and production especially in the conflict zones
which adversely impact the economy of the country.
3 .Inflation and economic instability:
Export and imports are affected ,causing price hike and scarcity of good.
Scarcity of goods and increased government spending can fuel inflation making it
difficult for common people to afford even the basic commodities
Currency value may fall .
Foreign and domestic investor typically withdraw capital and halt new
investment .This lead to reduced foreign direct investment(FDI),a slowdown in
private sector growth and fewer job opportunities .Even after the war ends ,the
memory of the instability can linger ,making investor cautious for years, especially if
political tension or security issue persist
4. Long Term Reconstruction cost:
Rebuilding infrastructure ,institution that are destroyed during war takes years and
massive financial resources.
Opportunity cost are high ,as fund that could be used for development go to
recovery.
5. Global Ripple effects:
War especially between major economies, affect the global markets.
Energy Prices like oil and gas can spike, impacting the inflation worldwide.
GRAPH FOR REFERENCE
Source: The Atlantic
Source:Investopedia
Source:Statista
Source:Economicshelp
Sources of Information:
https://en.wikipedia.org/wiki/Effects_of_war
https://www.economicshelp.org/blog/2180/economics/economic-impact-of-war/
Sources Of Images:
https://cdn.theatlantic.com/assets/media/img/3rdparty/2012/11/debt-and-gdp-
04.png
https://www.investopedia.com/thmb/HKsAt0osZ_02BaBPjkR7km_RH34=/
1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/
UnitedStatesMilitarySpendingbyWar2-01eefd387f594f6f83a3d6f41098ac76.jpg
https://cdn.statcdn.com/Infographic/images/normal/27593.jpeg
https://www.economicshelp.org/wp-content/uploads/2021/11/oil-prices-1970-
2021.png
