# 1. Introduction

<mark>The increase in conflict and natural disasters around the world has affected nearly 132 million globally, with conflict continuing to be the main driver of growing humanitarian needs (UNOCHA 2019). The pattern of fragility, conflict, and violence (FCV) engulfing many parts of the world today is associated with long‐term psychological consequences (Murthy and Lakshminarayana 2006). Parts of the Khyber Pakhtunkhwa (KPK) province and the Federally Administered Tribal Areas (FATA) of Pakistan have suffered from such armed conflict for the last 3 decades. The 2009‐ 10 insurgency and subsequent security operations displaced an estimated 2 million people from both regions. Severe damage to infrastructure and livelihoods has negatively impacted the social and economic fabric of the entire region, which now ranks among the poorest in the country.</mark> Epidemiological studies from these areas in Pakistan have shown high rates of common mental disorders (such as depression and anxiety) among the general population. A meta‐analysis of a subset of relatively rigorous post‐conflict surveys showed the prevalence of depressive symptoms to be around 17.3 percent (Steel and others 2009).<sup>2</sup> Global estimates of productivity losses due to depression are estimated to be around US$1 trillion dollars per year globally (World Health Organization (WHO) 2017). In this context, the question of the impact of common mental disorders, such as depression and anxiety, on economic productivity in FCV regions is a critical one (British Psychological Society 2011).<sup>3</sup> Since economic activity in FCV regions is heavily dominated by small and medium enterprises (SMEs) whose owners are prone to high levels of stress (Ang, 1991), it is pivotal to understand better the extent of prevalence of mental health challenges among SME entrepreneurs as well as its impact on their health and economic outcomes.

Mental health, well‐being, and lasting economic outcomes are intimately related. The WHO defines mental health as “a state of well‐being in which every individual realizes his or her own potential, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to her or his community” (WHO 2014). There are several arguments to be considered for why researchers interested in improving economic outcomes in a broader sense need to focus on the mental health and well‐being of SME entrepreneurs, rather than focusing on productivity alone. First, well‐being is a multi‐dimensional construct that is a robust predictor of health, productivity, and retention outcomes at the firm‐level (Sears and others 2013). Second, depression in parents is associated with children’s poorer physical health, lower human capital attainment, and the onset of psycho‐pathology later in life, leading to multi‐ generational suboptimal health and economic outcomes (National Research Council (US) and Institute of Medicine (US) Committee on Depression, Parenting Practices, and the Healthy Development of Children 2009). Finally, from a social justice point of view, freedom to achieve well‐being is of primary moral importance, and is to be understood in terms of people's

> 2 The unadjusted weighted prevalence rate of depression across all studies was found to be 30.6 percent. A more conservative estimate, based on 26 surveys that combined diagnostic interviews with representative samples, found the prevalence across the studies to be 17.3 percent.

> 3 Common mental disorders are defined as depression, generalized anxiety disorder (GAD), panic disorder, social anxiety disorder, phobias, obsessive‐compulsive disorder (OCD), and post‐traumatic stress disorder (PTSD).

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