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The Road to Post-War Recovery

Effective financing for peacetime is a good investment of donors’ resources and a major factor in conflict prevention. Indeed, the UN reckons that if economic reconstruction fails, countries in the transition to peace have a better than even chance of reverting to war.

For the world’s advanced countries, a key challenge is to broaden economic and social inclusion without diminishing the economic dynamism they already have. . The problems of war-ravaged countries are far more acute and their choices much more constrained. Indeed, they confront a double challenge: to create dynamic economies and to promote, at the same time, economic and social inclusion. Without both of these elements, national reconciliation will likely prove impossible.

Social exclusion in industrial countries imposes costs throughout society that policymakers must address with effective and targeted measures. Lack of jobs, for example, often leads people, particularly the young, away from work and into dependency on drugs and crime. Society, then , needs to pay for the costs of crime prevention policies and the administration of justice.

A flexible labor market, as many suggest, will not in itself promote inclusion. Welfare programs in war-ravaged countries often aggravate joblessness by reducing work incentives and creating a culture of dependency. Minimum-wage laws and labor agreements often make the least productive workers unaffordable to law-abiding employers. So what these countries need are more employment opportunities and higher salaries in the private sector for these workers.

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