Understanding Peace Economics
Cespic Working Paper 2026/04
Raul Caruso
This paper develops a definition of Peace Economics. A clear and precise definition is essential to develop a workable economic approach to peacebuilding through economic policy instruments, as well as to properly understand the economic costs and benefits of peace. The paper proceeds by outlining the main pillars of peace economics: (i) the theoretical approach proposed by Boulding concerning the interplay among threat, exchange, and integrative systems; (ii) the consequent allocation of resources between productive and unproductive activities; (iii) the economic impact of military commitment, which generates substantial long-run losses for societies; (iv) the role of deterrence, traditionally regarded as the dominant framework shaping state policies; and (v) the key elements required for a normative approach to peace economics.
