reducing prospects for sustained rapid economic growth which is the only way countries can develop and reduce poverty. But in addition, this in turn has a detrimental impact on the capacity of the government to provide security—because the government cannot tax the informal sector or because the willingness to pay taxes has been eroded by corruption—and hence on security itself.<sup>5</sup> Finally, these various costs, including lower economic growth, tend to fall disproportionately on the poor (Box 1).

## **Box 1: Cost of Conflict and Insecurity for the Poor, Women, and Children**

The adverse effects of conflict and insecurity, and often of crime as well, tend to be disproportionately felt by the poor, minorities, and other vulnerable groups. This is partly because as in the case of many other public goods, the better-off can use their own resources to insulate themselves at least to some extent from insecurity (e.g. risk reduction / mitigation strategies such as private security, physical protection through fences etc., mobility), whereas minorities and vulnerable groups are at higher risk of being targeted in situations of conflict or breakdown of law and order when the state is no longer able to protect its citizens. To be sure, where insecurity is generalized and long-lasting, the effects reach all levels of society, and many assets of the rich may get lost or devalued. Nevertheless, the poor are invariably more vulnerable to conflict and insecurity as they have fewer assets and weaker coping mechanisms to start with. Even if they lose many of their assets, better-off people have a greater chance to escape conflict and tend to be in a better position in terms of livelihoods where they flee to.

Conflict and insecurity can have especially damaging effects from a gender perspective, notably in the form of escalated violence against women. Rape and sexual assault against women of opposing groups in community-based conflicts are frequently used as an ultimate means of dishonoring entire communities and reducing people’s capacities to resist military advances, causing serious social and psychological disruptions. Any children resulting from such encounters will often be rejected by society and lead a pariah’s existence. In addition to violence directly against women, the environment of insecurity associated with conflict or a post-conflict situation can have a disproportionate adverse effect on women, as women’s greater vulnerability in conflict may lead to imposition of stricter social norms resulting in limited or no access to education and basic health care due to their reduced mobility. Prolonged periods of conflict, high levels of social violence, and lack of security can also be reflected in increased levels of domestic violence, in which women and children are the primary victims.

Conflict and insecurity have profoundly damaging effects on children. The loss of one or both parents, homelessness, the need to shoulder economic responsibilities in childhood, exposure to violence and abuse, disruption of elementary education, and lack of access to health services and immunization are notable examples of conflict-induced consequences which have profound and life-long impacts on children.

A way to measure the degree to which the security constraint is binding consists of looking at its price (Hausmann, Rodrik, and Velazquez, 2005). From this perspective, high payments for security protection constitute additional costs of doing business, constraining growth because as a result entrepreneurs cannot fully appropriate the profits from their investments. Symptoms of security-related risks constraining growth include large unofficial payments, a repressive taxation system, and macroeconomic instability. Hausmann _et al_ argue that policy makers should focus on the binding constraint, as removing other constraints might not only fail to generate the desired improvement in the investment climate, but could even have a negative impact. Such analysis of the investment climate could therefore guide the prioritization of efforts across security areas (see below); it would also bring out underlying governance weaknesses which often are behind the manifestations of insecurity.

# **2.2. Security, Human and Social Capital, and Poverty**

Human and social capital costs, in addition to their impact on the investment climate, have a direct negative impact on well-being (see for example World Bank, 2002). These factors also generate dynamic effects—either to cope with the risks or to mitigate them—that further increase their costs over time. Across the board, these various costs tend to impact 5 World Bank (2005a, Chapter 1) outlines a framework in the case of Afghanistan where such vicious or virtuous circles are at play.

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