The Peace Industry

To fully understand the effects of peace on economies there is a need to understand what business segments thrive in peace rather than violence. The following discussion will not attempt to define The ‘Peace Industry’ but will point to ways of assessing what businesses may belong to it and some simple examples of how to value peace.

It has been argued that all industry segments benefit from war or violence: defense contractors buy computers, soldiers need to be fed, and defense spending on R&D creates technological innovation that then has flow-on benefits for society. As most defense spending originates with government the same money could be spent on solving sustainability challenges, infrastructure to produce greater economic efficiencies and much more. Government expenditure will flow through society regardless of its starting point therefore the flow-on effects can be considered neutral.

By assigning certain industries to The ‘Peace Industry’ we are able to understand the size of this industry relative to other business segments as well as its importance to the overall economy. There are many industry segments that clearly thrive in peace. The aim of this section is not to define all members of The ‘Peace Industry’ but simply to look at some examples of industries that thrive in peace, discuss how violence affects their bottomline
and show some statistical relationships between improvements in market sizes and their position in the Global Peace Index.

Defining peace as the ‘Absence of Violence’, the definition of the Global Peace Index, allows us to delve more deeply into the indicators that can be used to measure peace. Following are some approaches which can constitute initial steps in defining the members of The ‘Peace Industry’:

• Undertake statistical analysis of industry revenues as correlated to overall peacefulness. Overall peacefulness can be measured by the Global Peace Index. Initial research has been conducted into the relationship with per capita expenditure and peacefulness, and asset valuations and peacefulness. The outcome of some of this research is contained in this section.
• Select a number of indicators from the Global Peace Index and analyze changes in the individual indicators across nations to then analyze the cost structures of companies or industries in these markets. This can lead to understanding what the relationship may be between business costs and peace. The following indicators from the Global Peace Index could prove useful: (The Economist Intelligence Unit has independently selected these indicators as valid measures of peacefulness. They have been analyzed and verified for the 121 countries that were covered in the 2007 edition of the Global Peace Index.)
  • Number of internal police and security officers per 100,000
  • Number of homicides per 100,000 of population
  • Number of jailed population per 100,000 population
  • Likelihood of Violent Demonstrations
  • Level of Violent Crime
  • Potential for Terrorist Acts
  • Relationship with Neighbouring Countries
  • Ease of Access to Weapons
• Conduct a survey to poll industry leaders and ask them whether they felt that their business improved when violence or war decreased. By using a rating scale it would be possible to understand which businesses felt that peace highly correlates with improved business prospects.

To analyze peace against the selected industries, in the context of the Global Peace Index, countries form a good basis for analysis as they can then be grouped into international and domestic markets. Peace can now be correlated with a company’s international business activities. Furthermore, it is possible to break markets down into regions or cities within nations to help companies better analyze their markets.