# **1. Introduction**

The scale and intensity of the violence and destruction associated with the civil war that engulfed the Syrian Arab Republic since 2011 have very few parallels in recent history. The Syrian Observatory for Human Rights (SOHR) estimates the total death toll (from 15 March 2011 to 15 March 2019) at a staggering number of 570,000. The United Nations Economic and Social Commission for Western Asia (ESCWA 2018) ‐ which conducted an elaborate sectoral analysis of the economic cost of the Syrian civil war ‐ puts the destruction of the physical capital stock by end of 2017 at almost USD 120 billion. And, in terms of the cost to the overall economy, the World Bank (2017b) estimates that, from 2011 until the end of 2016, the cumulative losses in gross domestic product (GDP) reached a whopping USD 226 billion, about four times the Syrian GDP in 2010. These assessments seem to broadly cohere with the calculations of the country’s night‐light intensity by Ceylan and Tumen (2018) and Li et al. (2017), with the latter suggesting that by 2017, Syria had lost about 80 percent of its city night light.

Moreover, in addition to the massive death and destruction, this war has also created an unprecedented number of refugees and internally displaced persons (IDPs). According to the United Nations High Commissioner for Refugees (UNHCR), there are about 5.6 million registered refugees from Syria in neighboring countries. However, accounting for unregistered refugees in just the three countries of Egypt, Jordan and Lebanon would raise the aggregate number to more than 7 million (UNHCR, 2019). Adding these numbers to the about 6.3 million IDPs in Syria, we have almost two‐ thirds of the 21 million Syrian citizens who have been forced out of their homes. To appreciate the global impact of the Syrian refugees and IDPs crisis, it suffices to note that the former accounts for more than 23 percent of the total number of refugees worldwide, while the percentage of the latter is estimated at 20 percent of the total number of IDPs in the world.

The losses incurred by Syria are great, but it is not false hope to look toward recovery and further strengthening of the country’s socio‐economic fundamentals beyond its pre‐war situation. Chen, Loayza and Reynal‐Querol (2008) conduct a comprehensive evaluation of the aftermath of civil war using event‐study analysis across 41 countries over 1960‐2003. They show that recovery to pre‐ conflict levels and further improvements are possible for a country afflicted by war when relatively lasting peace is achieved. Other studies focusing on World War II (WWII) indicate countries returned to their pre‐war trends 15 to 20 years post war (Organski and Kugler 1977, 1980); and that countries suffering large negative output shocks grew systemically faster during the subsequent decades due to reconstruction dynamics (Milionis and Vonyo 2015). Because of the massive destruction of the factors of production in Syria at a scale more common in inter‐state wars than civil conflicts, the lessons from the post‐WWII reconstruction of Europe and insight from modern growth theory could be useful in assessing the post‐conflict growth potential for Syria. Janossy (1969) postulates that fast growth during reconstruction is not only the result of higher returns to physical capital accumulation (which diminish as capital grows in relation to output) but also depends on structural factors like the reorganization of economic activity and the reallocation of production factors. One of the key lessons from the experience of post‐WWII growth in the European countries and Japan, for example, was that the rapid growth impact of the massive re‐building of physical capital was made possible, not only by the Marshall Plan resources, but also by the relatively limited war time depreciation of the human capital base and technological potential (Smolny 2000).

The implication of the above for the post‐conflict economic reconstruction agenda for Syria ‐ with almost two‐thirds of its population internally displaced or living as refugees in foreign countries ‐ is that the restoration of human capital should be accorded the highest priority. And this should be 2