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The Economic Effects Of The Wars In Afghanistan and Iraq

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Using an example of your choice, what light can the ideas and analysis of an economist throw on a major current problem or issue of public concern? The invasion of Afghanistan in 2001 and Iraq in 2003 have and will be in the news day after day, with growing casualties demoralising many nations around the world. Another major problem, especially significant for both the United States of America and the United Kingdom, is the momentous financial costs that are being experienced by the governments, and it is this issue that I shall investigate. I will also try to show how defence can be accounted for as market failure. Defence is a public good, provided for by the government, not private markets. To understand what a public good is, I must first introduce two characteristics of a public good. Firstly, a public good is non-rivalrous. This means that even if someone consumes or utilises this product, the supply for others will not be diminished. ...read more.


This is the main reason why defence is controlled by the government and why it is very difficult to impose prices on public goods. The US government has spent an estimated $360 on the Iraq War since it began in 2003. At this time the current rate of U.S. expenditure in Iraq is approximately a staggering $6.4 billion a month. In addition the United Kingdom has spent �4.5 billion of a �7.4 billion budget for Iraq. Below is a pie chart showing the US budget in 2006 and it's Gross Federal Dept (from 1940 to 2010). [Fig 1] [Fig 2] [Source- US Office of Management and Budget ] The pie chart [Fig 1] shows that 57% of the US Federal Budget was allocated to National Defence, with a substantial amount of this figure due to be spent on the wars in both Iraq and Afghanistan (the actual amount estimated to be spent on Iraq in 2006 was $60 billion) ...read more.


The obvious way the government could stop all of these problems would be to pull the troops out of Iraq all together. This move would probably be welcomed by a large proportion of the British population, but would be seen as a sign of weakness from the Prime Minister and his government. The obvious reason for a return of the troops is the fact that many people in Iraq have died (the war is estimated to have resulted in the deaths of 655000 Iraqi civilians in just 4 years).Other possible reasons are the huge financial burdens that have been experienced and will continue to be experienced by the governments of the United States and the UK, or the fact that there is no real legal reason why there are troops there at all. The process of rebuilding Iraq will be a very long one, probably taking decades to resolve whilst the hugely powerful states of the USA and the United Kingdom have the resources that mean that this hugely expensive invasion of Afghanistan and Iraq, will only be a small blip on their national dept. ...read more.

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Response to the question

I feel this question is quite challenging, as it is difficult not to impose a moral viewpoint beyond the economic argument. This essay manages this well, using economic analysis as stated in the question to see what the effects of ...

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Response to the question

I feel this question is quite challenging, as it is difficult not to impose a moral viewpoint beyond the economic argument. This essay manages this well, using economic analysis as stated in the question to see what the effects of war include. I feel to take this essay further, there needed to be some consideration of the opportunity cost to the spending on war. Or, if this essay had chosen a different war and case study, take Nazi Germany for example, you could look at how war propelled the economy by increasing employment.

Level of analysis

The analysis here is okay. For a mainly macroeconomic topic, this essay seems to focus on the microeconomic concepts of externalities and public goods. The definitions and explanations here are strong, and there is a good exploration as to why these are relevant. To enhance this argument, I would've liked to have seen a diagram representing how public goods are under-allocated. Examiners are keen to see you fully understand concepts. If I were answering this essay, I would've looked at how war can affect the macroeconomic objectives depending on the situation. As mentioned above, war efforts can cause mass increase in aggregate demand and so promote growth if the war is fought away from home. Yet, if the war is fought domestically, then aggregate demand can take a huge decrease and shift left, along with aggregate supply as firms shut and infrastructure is broken. Just a wider consideration of situations would've put this essay in a better place. It was good to see some contextual figures looking at how much the USA spends on defence and war, but there needs to be more analysis here to secure the top marks.

Quality of writing

The structure here is basic. There is no argument built up here, and sometimes paragraphs are overly short and don't complement each other well. For an essay like this, there needs to be some progression. It is evident somewhat when the essay states "To understand what a public good is, I must first introduce two characteristics of a public good". But, I have one query with this. I'm not a fan of the first person, especially when saying "I must" or "I will investigate" as it's completely unnecessary and comes across as unsophisticated. But beyond that, the first person can lead to phrases such as "In my opinion" and examiners dislike such comments. This is because it suggests your argument is opinion based, rather than built upon solid argument and analysis. It's just a good habit to get into, not using the first person.

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Reviewed by groat 11/04/2012

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