Abstract
Theories of post-civil war recovery predict a “peace dividend” via the re-accumulation of capital per worker. I hypothesize that such a recovery will occur only when quality institutions have been established. To test this hypothesis I couple data on civil wars from 1970 to 2000 with the measure of legal structure and protection of private property from the Economic Freedom of the World Index. Results from growth regressions using an interaction between an index of property rights and legal institutions, and investment as a percentage of GDP confirm that weak and uncertain institutions inhibit investment, particularly private investment from being allocated efficiently to contribute to recovery in the post-conflict environment. This paper provides empirical support for a model of conflict recovery via capital accumulation, conditional on legal structure and the protection of property rights.