The Economic Costs of Civil Wars - Term Paper Example

Big Business Big Business The Economic Costs of Civil Wars Overview It is a concern how various conflicts in the Middle East have impaired the economy of the countries affected. These conflicts affect not only the country in question, but also the neighboring countries as well (Costalli, Moretti, & Pischedda, 2014). These regional wars are indeed very detrimental to the society. Such conflicts in fact cause more harm than good. They have been in fact known to cripple the set financial structures in such countries. Additionally, they cause the inflation rates to rise and cause a huge deficit in current accounts. After the war, it is important to establish a post-conflict recovery period where a country affected by civil war can get sufficient time to jump-start its economic mechanisms and strengthen the financial structures. The post-conflict recovery period is essential because it determines to what extent a particular economy will recover from the crippling effects of civil war. War paralyzes all economic activities of the conflicting country as well as all the neighboring states. Such important activities as regional trade often come to a standstill. Take, for instance, the situation in Iraq in 2003, in which US invaded them. This invasion was a major setback for the economy of Iraq, but amazingly, it only took them a year to recover. This was because Iraq is a major oil producer, and its economy is well structured. Oil is a major issue in international business currently (Ionica, 2012). Oil prices have drastically gone down, and, therefore, countries that are relying on oil for economic boost are facing uncertain times. Venezuela, for instance, relies on oil for economic stability. They are currently experiencing economic hardship because the prices of oil in the international market have gone down. Lebanon was affected by conflict, and it took twenty years to experience full economic recovery. Motivation This paper scrutinizes the role of the civil war in the destruction of a particular economy. It seeks to expose the role of big businesses in this civil war. This is because a big business just cannot attain stability in an area that is experiencing conflict. It seeks to reveal to how conflict directly affects the economy (Bouri, 2014). There is a tremendous impact that these wars have on big businesses, some of which may totally collapse because of the economic instability caused by conflict. Therefore, it is important for global enterprises to realize how conflict is detrimental to big businesses and its direct effects on the economy (Costalli, Moretti, & Pischedda, 2014). Good examples of places whose vibrant economies have been torn apart by war include places like sub-Saharan Africa states like Libya and Egypt, Iraq and other parts of the world like Ukraine. Policies exist, which can protect a given economy from collapse in case of such catastrophes. It is also important to look at the current issues, which ensure that organizations are functional in the business (Lechthaler and Leinert, 2012). Such factors as globalization and multicultural corporations come into play. It is necessary to consider how these organizations apply certain innovations of business acumen to ensure that their businesses take a bigger stake in the market and rake in huge profit margins. Huge financial interests come into play in such situations with some of these big companies seeking to establish themselves in a new market and apply their business operation policies (Iyortsuun and Akpusuugh, 2014). There are currently a vast number of civil wars occurring in the world, with areas like Syria, Iraq, Afghanistan, Egypt, Libya, Somalia and Nigeria undergoing conflict situations. It is important to consider that many of these countries in question have abundant natural resources, especially oil. Relation to the Course These observations are very vital to note with respect to international business and trade. They are good examples of how such issues as conflict affect international trade. It is vital to note that economic instability not only affects the country in question, but also hugely impacts on the economy of all the neighboring countries (Ionica, 2012). It hampers the international trade structures and cause a massive decline in the economy of the affected country. Many factors have to come into consideration, especially when considering how individual economies differ. Lebanon was vastly different from Iraq and required twenty years to recover from conflict. This was because it had weaker structures in place as compared to Iraq. Iraq is a primary source of motivation for many financial analysts and observers. It is of significant interest as to how a country can establish stable economic structures that stand in place amidst situations such as political unrest and civil war (Iyortsuun and Akpusuugh, 2014). The economic stability of a country relies on its ability to set up financial structures that are stable and long lasting (Costalli, Moretti, & Pischedda, 2014). Iraqs economy relies heavily on oil for its survival. Iraq ensures that it carefully handles its abundant oil resources and has managed to set up secure systems that ensure that the economy is always able to stand and remain self-sufficient. It has established international trade structures and stable business partners who act as permanent buyers to the commodity (Iyortsuun and Akpusuugh, 2014). It has also managed to maintain good economic relations with its trade partners. Therefore, an enormous part of Iraqs economic stability has to do with its global positioning in trade. Relevance for Contemporary Management These observations directly relate to business studies. This is because one can grasp many of the concepts that govern business and link to the economy, finance, and international relations. Natural resources have a significant role to play in the economic stability of any country. Countries that have abundant natural resources, if utilized correctly, will be able to achieve economic stability faster and have a platform for rapid economic growth and stability (Lechthaler and Leinert, 2012). Some of the economic stable countries have been able to utilize their natural resources properly. Other countries like India or Japan have not been privileged with abundant natural resources, but they have been able to use their limited resources carefully. Another significant feature to consider when analyzing Iraq, and its unique economic situation is the international trade environment. Iraq relies heavily on the international oil trade to strengthen its economy (Ionica, 2012). Iraq has managed to maintain cordial relations with its foreign trade partners, and through this, it has been able to enjoy a stable market for its vast oil resources. Though it went through political uncertainty during the period of its invasion, it was able to restructure quickly itself and retain the market for its oil. It had a very rapid post-war recovery process that was also boosted by the fact that interested parties were ready to assist the country get back on its feet (Iyortsuun and Akpusuugh, 2014). After it had recovered from the effects of its instability period, it was able to bounce quickly back on the international trade market and reorganize itself into the position that it held. This shows the importance of maintaining good ties with other countries, and how it ensure stable economic growth. Comments and Reflection These issues are indeed very relevant to economic stability, as well as contemporary management because they help in understanding how good relations with other countries are vital to the overall success of the international trade (Bouri, 2014). It also highlights the importance of having sufficient structures in place to be able to oversee the development and stability of a countrys economy. Accountability to individual organs is necessary to ensure that there is proper running of these structures. A united country will be able to recover quickly should it go thru uncertain economic times, and this will attract the foreign market to consolidate its ties with the country in question. The importance of placing stable structures that can manage organizations professionally is also crucial. Another important aspect to this is how the national resources in Iraq are managed. There are certain structures that have been put in place to manage this natural resource. One of the important things to consider is the availability of a market for the oil. There is available economic assistance in the form of expertise and consultancy services from the first world countries (Bouri, 2014). These often chip in and help boost the countrys management structures that have been put in place. They offer assistance when it comes to their approach to the global marketplace, and in transactions that need verification from another party. All in all good co-relations with world economic powerhouses is one of the determining issues in the overall success story of Iraqs economy. It is vital to appreciate the output of all the trade partners, as well as Iraq’s efforts in ensuring that all set structures are in place (Lechthaler and Leinert, 2012). This is a superb illustration of how a countrys natural resources can contribute to its economic stability. This will ensure that even such threats as political uncertainty will not hamper economic progress and cause the collapse of set structures. Indeed, it is important that a state maintain proper relations with others because this will have a significant effect on its overall development. Countries that have political affiliations with each other can freely interact with different aspects such as social and economic interaction. This is indeed is necessary for development and growth (Costalli, Moretti, & Pischedda, 2014). These countries will eventually become trading partners and gain economically from each other. Trade relations form an enormous part of relations between countries. One can learn that huge multicultural corporations have an enormous role to play in the growth of a country’s economy. This is because they will do anything to solidify their sphere of influence in a particular are if they discover the economic potential or find vast natural resources that they can tap from. This may include assisting a country with economic boosts should circumstances cause a huge drop in the economy. This is truly a tremendous lesson learned in the connection between international relations, international trade and the overall economic policies of countries. Bibliography Bouri, E.I., 2014. Israeli-Hezbollah War and Global Financial Crisis in the Middle East and North African Equity Markets. J. Econ. Integr. 29, 1–19. doi:http://dx.doi.org/10.11130/jei.2014.29.1.1 Costalli, S., Moretti, L., & Pischedda, C., 2014, The Economic Costs of Civil War: Synthetic Counterfactual Evidence and the Effects of Ethnic Fractionalization. HiCN Working Ionica, O., 2012. The Role of SME Sector in the Post-Socialist Countries’ Future. Int. J. Bus. Soc. Sci. 3, n/a. Iyortsuun, A.S., Akpusuugh, T.K., 2014. The Impact of the Global Financial Crisis on Business Development in Makurdi Metropolis, Benue State, Nigeria from 2007-2009. Int. J. Bus. Manag. 9, 64–76. Lechthaler, F., Leinert, L., 2012. Moody Oil - What is Driving the Crude Oil Price? (CER-ETH Economics working paper series No. 12/168). CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. Read More