How Civil Unrest Affects the Economy: A One-Minute Guide to the 2020 Crisis and Beyond

The Economics Behind Civil Unrest Explained in One Minute: From 2020 Realities to Long-Term Issues

Civil unrest is a term that refers to protests, riots, and other forms of social disorder and conflict that challenge the authority of governments or institutions. Civil unrest can have various causes, such as political, economic, social, or environmental grievances, and can have significant impacts on the economy and society.

In 2020, the world witnessed a surge of civil unrest events, triggered by the COVID-19 pandemic, racial injustice, political polarization, and rising inequality. According to the IMF’s Reported Social Unrest Index ¹ , which measures media mentions of words associated with unrest across 130 countries, the fraction of countries experiencing large spikes in unrest rose to around 3 percent in February 2020, close to its highest levels since the onset of the pandemic ².

Civil unrest can affect the economy in several ways. On the one hand, it can disrupt economic activity, reduce consumer and investor confidence, damage infrastructure and property, and increase public spending on security and social services. On the other hand, it can also reflect social demands for change, accountability, and justice, and pressure governments to implement reforms that can improve economic and social outcomes in the long run.

The economic impact of unrest also depends on its duration, intensity, frequency, and motivation. For example, IMF research shows that protests motivated by socio-economic concerns result in sharper GDP contractions compared to those associated mainly with politics/elections ³. Moreover, civil unrest can have spillover effects on neighboring countries or regions through trade, migration, or contagion channels.

The economic causes of civil unrest are complex and multifaceted. Some of the factors that can increase the risk of unrest include inequality, poverty, unemployment, corruption, repression, discrimination, and lack of opportunities. However, these factors are not sufficient to explain why some countries experience more unrest than others. Other factors, such as institutional quality, social cohesion, political participation, and cultural norms, can also play a role in shaping the likelihood and nature of civil unrest.

In conclusion, civil unrest is a phenomenon that reflects both the challenges and the aspirations of societies. Understanding its economic drivers and consequences can help policymakers design policies that can address the root causes of discontent, foster social dialogue and trust, and promote inclusive and sustainable development.

¹: Global Civil Unrest: Contagion, Self-Organization … - PLOS ²: Social Unrest is Rising … - IMF ³: Could Renewed Social Unrest Hinder … - IMF

Comments

Trade Unions 101: What They Are, Why They Matter, and How They Wor

The history of trade unions is a long and complex one, involving social, economic, and political factors. Here is a brief summary of some key events and developments: Trade unions originated in Great Britain, continental Europe, and the United States during the Industrial Revolution, when workers faced harsh and exploitative conditions in factories and mines 1 . Trade unions were initially illegal and persecuted by employers and governments, who used laws such as restraint-of-trade and conspiracy to suppress their activities 1 . Trade unions gradually gained legal recognition and protection through acts such as the Trade-Union Act of 1871 in Britain 1 and a series of court decisions in the United States 2 . Trade unions adopted different strategies and structures depending on the country, industry, and sector they operated in. Some examples are craft unions, general unions, and industrial unions 1 2 . Trade unions also developed political affiliations and influences, such as the...

The Zero-Based Budgeting Method: How to Make Every Dollar Count

Hey friends! Are you tired of living paycheck to paycheck and never being able to save any money? It's a common problem, but there's a solution. Enter the zero-based budgeting method. Zero-based budgeting is a budgeting system where you start with zero dollars in your budget and then allocate every dollar to a specific category, whether it be savings, housing, or entertainment. The idea is that at the end of the month, your income minus your expenses should equal zero. Sounds simple, right? Well, the trick is sticking to it. But with a little discipline and effort, zero-based budgeting can be a game-changer for your finances. So, how do you get started with zero-based budgeting? Here's a step-by-step guide: Write down all of your monthly income, including your salary, any side hustle income, and any other sources of income. Write down all of your monthly expenses, including everything from rent and utilities to groceries and entertainment. Make sure to include all of your f...

How to Avoid Buying a Lemon: What George Akerlof Taught Us About Information Asymmetry and Market Failures

How the Market for Lemons Explains Why We Can’t Have Nice Things Have you ever wondered why it is so hard to find a good used car, or a reliable contractor, or a trustworthy insurance company? You might think that the market would reward the sellers of high-quality products and services, and weed out the low-quality ones. But sometimes, the opposite happens: the market becomes flooded with “lemons”, or defective goods, and the good ones disappear. This is what Nobel laureate George Akerlof called the “market for lemons” problem, and it has profound implications for many aspects of our economy and society. What is the market for lemons? The market for lemons is a situation where there is asymmetric information between buyers and sellers, meaning that one party has more or better information than the other. In particular, the seller knows more about the quality of the product or service than the buyer, and the buyer cannot easily verify it before making a purchase. This creates a problem...

The Savvy Wallet

Search This Blog