The effect of the Troubles on GDP in Northern Ireland

This paper explores the effect of conflict on GDP in Northern Ireland. A synthetic control region constructed as a weighted average of other UK regions provides an estimate of counterfactual 'no-conflict' GDP. Comparing this with actual per capita GDP suggests a negative impact of up to 10%. Excluding the increased grants provided in response to the conflict, a 15-20% reduction is evident. Most forms of terrorist activity had negative effects over the period 1969-1997. Deaths attributable to Republican paramilitary groups or to the State appear to have a greater and more lasting impact on GDP than deaths attributable to Loyalist paramilitaries.

► We examine the effect of conflict on GDP in Northern Ireland. ► Using a synthetic control region, we estimate a reduction of up to 10%. ► The impact on GDP excluding grant increases is larger, at 15-20%. ► Most measures of violence had effects lasting a number of years. ► Republican and State killings appeared to have more impact than Loyalist killings.