The Shadow Economy in Conflict-Affected Countries

Published on 19 December 2013

Targeting the shadow economy in conflict-affected contexts is a complex task about which little is known (expert comment). This rapid literature review uncovered little focusing on interventions aimed at incentivising war profiteers to join the legal economy and even less on leveraging the positive social function that shadow economies can provide to conflict-affected populations.

The majority of the literature uncovered during this rapid review were academic articles, written by a relatively small pool of writers. There has been much less focus on addressing these questions in more recent literature, although the gaps in knowledge still exist.

Criticism has been made in relation to the lack of strong evidence provided in the literature in relation to interventions tackling war economies (Evans, 2011, p.28) and “little practical guidance exists” (Ballentine and Nitzschke, 2005, p.14). There are mentions of the need for incentives to persuade shadow entrepreneurs to join the legal economy. However, there are few details about how this has been or can be done (e.g. Ballentine and Nitzschke, 2005, p.28, Guistozzi, 2007, p.86; Malone and Nitzschke, 2005, p.14).

Nevertheless, despite being “a very complex issue to which there is no quick solution” (expert comment), a number of lessons and suggestions have emerged of approaches which can be used to (i) leverage the positive social function that shadow economies provide to conflict-affected populations; and (ii) incentivise war profiteers to join the legal economy in post conflict environments. These include flagging up interventions which have had a detrimental impact.


Image of Brigitte Rohwerder

Brigitte Rohwerder

Research Officer

Publication details

published by
Rohwerder, B.


Related content