The Promise and Peril of Peacekeeping Economies

Abstract

Contemporary United Nations (UN) peacekeeping deployments commonly pursue both security and economic objectives, but the existing scholarly literature contains hardly any systematic assessments of peacekeeping missions' economic effects. We address this issue in two ways. First, we use cross-country data to show that UN peacekeeping missions are large-scale economic interventions. They stimulate demand in depressed economic environments; we find significantly higher economic growth in the presence of peacekeeping deployments than in comparable cases without them. However, we estimate that economic growth rapidly declines when missions end, which suggests that they do not necessarily promote stable economic development. Second, we provide evidence in this vein by turning to microlevel survey data that we collected in Monrovia, where the United Nations Mission in Liberia (UNMIL) had a large presence from 2003 onward. Our data suggests that UNMIL's spending created demand for low-skill employment in the service sector, largely without facilitating skill transfers or loosening credit constraints for business owners. This illustrates the problem of "peacekeeping economies" suggested by our cross-country analysis: peacekeeping missions help create an economic boom fueled by demand in nontraded products, particularly low-skill services, which may not be robust to the mission's withdrawal.