Opinion: Why I’m optimistic about peace-positive economic growth

State-based armed conflict emerged as the top immediate risk for 2025 in the World Economic Forum’s new Global Risks Report, published this month as world leaders prepared to meet at Davos, Switzerland. Why is conflict such a concern from an economic standpoint? Economies that build peace provide fair opportunities and benefits, increase cooperation and raise the cost of violence. We can call this a peace dividend. This can create a virtuous circle whereby more social cohesion increases trust and cooperation in private transactions, which is good for the economy. By contrast, development policies in fragile or conflict-affected settings, or FCAS, can backfire when they do not consider the conflict dynamics. Not only is conflict becoming more deadly, it is also crippling economies. Research has found an average drop in GDP of 18% after a civil war, coupled with slow economic recovery. Yet, development budgets have shrunk, while military expenditure has risen steeply. Peace is not just a job for the United Nations. It is in the interests of governments, businesses and development groups to commit to conflict reduction and peace in their strategies. As trade, diplomacy, and development policies also grow ever closer, there is an urgent need to use these policies as levers for peace. Here’s how the shifting global economic and development landscape could nurture peace, collaboration, and trust — a “peace economy.” Trade, livelihoods, and natural resources What, in practice, might a peace economy look like? Let’s take a look at three areas of potential: trade, livelihoods, and natural resources. Trade creates interdependence and collaboration between countries and communities, making peace a win-win. In the Great Lakes region, we — International Alert — have been able to prove the value of providing cross-border entrepreneurs and traders (especially women and youth) with leadership capacity and conflict resolution training, supporting them to establish trading structures and influence trade policies. Here, they work together for a better business environment across conflict divides. “Peace is not just a job for the United Nations. It is in the interests of governments, businesses and development groups to commit to conflict reduction and peace in their strategies.” --— Building livelihoods does not automatically build peace, but economic opportunities feed into the calculations people may make about whether violence is worthwhile. Given the growing youth population in Africa, African governments on the continent especially will need to strive to ensure their economies provide productive jobs for the growing youth population. This includes supporting peace-minded entrepreneurs to operate and grow their business. Development entities and peacebuilders can collaborate with microfinance institutions like credit unions to improve these small businesses’ access to finance. When natural resources create riches and finance only for those who control them, there is a demonstrated uptick in violence. Highly valuable extractives such as metals and minerals are common in FCAS. As mineral demand rises through the green transition, it is more important than ever to learn past lessons from the extractives industries. This means the green transition must be decentralised, create local jobs, ensure fair access to benefits, and protect the environment. Using mining projects to upskill staff can be promising for peacebuilding, and alongside mineral traceability and transparency initiatives, such as the “Blue Mine” certification, we and partners have supported artisanal gold mining in eastern Democratic Republic of Congo. The role of multinational mining companies is critical and their corporate social responsibility can reduce violence. The onus is on governments to encourage a race to the top in corporate social responsibility and mineral supply chain transparency. Development finance must be conflict-sensitive 2024 saw a welcome record replenishment of the World Bank’s International Development Association, or IDA — the largest source of concessional finance that low-income countries can access. The World Bank published how these same countries are suffering economically due to deadlier violence and conflict. Now is the time to realize the impact of this finance by strategically prioritizing peace. Getting this right will require honest conversations about the trade-offs between commercial and impact objectives. For instance, an infrastructure investment like a road to bring an export to an international market might have a faster return on investment, but an investment in human capital through inclusive health and education might be better for peace in the long run. Everything in IDA must be conflict-sensitive. This matters because channeling finance into FCAS without considering the local power and conflict dynamics could aggravate divisions, inequalities, and grievances. Building stronger community participation into projects could boost inclusion and trust. Although some development banks have conflict sensitivity policies, these need proper commitment, financial resource, leadership, and cultural change to be implemented effectively. Private investment — the potential of the peace-positive approach Peace-positive investment means investment that delivers prosperity and peace. Initiatives include Peace Bonds, Peace Renewable Energy Credits, or P-RECs, and Investing4Peace. Development banks play another essential role in peace economies: They help leverage private investment in FCAS. 2025 is likely to see a rising push for private sector finance in FCAS for climate adaptation, following on from last year’s COP29 commitments, and for the upcoming Financing for Development conference. I’m optimistic about peace-positive investment as an approach. Success will require investors to work differently, such as aligning commercial objectives with local needs, and using conflict analysis in their investment analysis and risk. The path forward There is an opportunity to make peace an explicit goal in economic development, investment, and business in FCAS, taking peacebuilding out of its box. This is not an add-on but means partnering better across sectors and using what we know about FCAS to implement interventions that lift people from fragility. Solidarity, collaboration, and interdependence are in our interests.