The Economic Effects of Political Violence: Evidence from the Genocide in Rwanda

Studies on the economic consequences of internal political violence typically find negative short-run effects that are not very large, and no evidence for full economic recovery. We study the impact of the Rwandan genocide in 1994 on economic development using the synthetic control method. We find a 58 percent decrease in GDP in 1994, and strong evidence that Rwanda’s economy was then catching up with the estimated counterfactual GDP it would have had in the absence of the genocide, with the gap closing after 17 years. The negative effects were more pronounced in the industry and service sectors than in agriculture.