Calculating the Economic Impacts of the Syrian Conflict
What damage has the Syrian conflict inflicted on Syria's economic infrastructure? What are the implications of new infrastructure spending?
The World Bank in collaboration with RAND has developed an online calculator that allows the user to calculate and forecast the costs of the Syrian war. This calculator combines data from the World Bank with insights from the economics literature to estimate the economic impact of destruction and infrastructure spending in seven key sectors — agriculture, education, energy, health, housing, transportation, and water and sanitation — in six war-torn cities. It allows users to vary key assumptions about the extent of destruction and intensity of infrastructure spending activity, and estimates the net economic impact on the gross domestic product (GDP) of these six cities.1
The online calculator supplements the 2017 World Bank's MENA Economic Monitor The Economics of Post-Conflict Reconstruction in MENA report, which provides estimates of the costs of the war — the human costs, the damage to infrastructure and physical capital, and the macroeconomic and sectoral costs. It complements the Syria ESIA report “The Toll of War: The Economic and Social Consequences of Conflict in Syria.
How to Use the Calculator
This online calculator allows users to estimate the economic impact of destruction and infrastructure spending in six war-torn cities in Syria: Aleppo, Dar'a, Hama, Homs, Idlib, and Latakia. Analysis focuses on these cities — and seven economic sectors — included in the World Bank’s Damage Assessment, which relied on satellite imagery and social media to estimate the extent of damage as of early 2016. For each sector, the calculator relies on three types of assumptions, which the user can vary to forecast the economic impacts of future destruction and infrastructure spending activities:
The share of infrastructure damaged by the conflict: The share of sector-specific infrastructure in the six cities damaged by the conflict.
The total dollar value of infrastructure spending: The total dollar value of infrastructure spending in a sector. Infrastructure spending impacts GDP in the short-term through the overall spending multiplier and in the long-term through the sector-specific output multiplier. The upper limit for the amount of infrastructure spending is the amount of resources that it would take to completely rehabilitate the damage to the sector. When infrastructure spending is set to the maximum, the net impact is often positive as a consequence of the direct economic benefit of infrastructure spending modeled through the spending multiplier.
The effectiveness of infrastructure spending and the impact on GDP are determined by three factors: spending multiplier, efficiency of infrastructure spending aid, and decreasing returns to spending. You can adjust each of these factors at the bottom of the calculator under "Advanced Options."
Output multiplier: The change in long-term GDP associated with a sector-specific change in economic infrastructure. For example, a value of 0.5 indicates that overall long-term annual GDP increases by $0.50 for every $1.00 of investment in that sector. The default values provided for each multiplier rely on a variety of assumptions, often derived from research in other countries that examines the productivity impacts of only small changes in infrastructure.
Use the information icons to learn more about the default values used for the share of infrastructure damaged and the output multipliers in each sector. After adjusting the sliders, selecting the next to Change in GDP from Damage, Change in GDP from infrastructure spending, and Net change in GDP will reset values to default.
Changes in GDP resulting from infrastructure spending capture both the net indirect effect—the overall long-term change in productive capacity after all infrastructure spending activities are complete—and the direct effect, the short-term transitory impact of increased domestic spending associated with the infrastructure spending resources. For simplicity the reported GDP changes include 10% of the total direct effect associated with the specified level of infrastructure spending.
All amounts are in billions (U.S. dollars, 2017) and are relative to the estimated annual pre-conflict 2010 GDP of $34.2 billion for the six cities: Aleppo, $16.2 billion; Dar'a, $1.4 billion; Hama, $3.5 billion; Homs, $7.0 billion; Idlib, $1.3 billion; and Latakia, $4.8 billion. 2 These six cities accounted for an estimated 51% of Syria's aggregate GDP of $67.5 billion in 2010.
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