An Original Theoretical Investigation into the Economics of Conflict Spillovers Between Nigerian States

Conflict in Nigeria generates economic spillover effects on neighbouring states through trade disruption, population displacement, and investment deterrence, but the economics of these spillovers has not been theoretically modelled for the specific spatial and institutional structure of the Nigerian federation, representing an important gap in conflict economics. This study conducted an original theoretical investigation into the economics of conflict spillovers between Nigerian states, developing a spatial conflict economics model and providing empirical estimation of spillover effects. A theoretical development and empirical application methodology was employed. The original spatial conflict economics model extended Becker's economics of crime framework and Martin et al.'s trade gravity model to incorporate conflict externalities, specifying mechanisms of economic spillover through trade disruption, migration-induced factor price changes, investment risk contagion, and intergovernmental fiscal spillovers. The model generated testable predictions about the size, direction, and decay of conflict economic spillovers as a function of geographic distance, trade linkage intensity, and bilateral migration flows. Empirical estimation using a spatial difference-in-differences approach with ACLED conflict data and state economic indicators confirmed significant negative economic spillovers from conflict-affected states to neighbours, with effects decaying at approximately 0.68 per additional state boundary crossed. Trade linkage intensity doubled the spillover magnitude. The study provides an original theoretical and empirical contribution to conflict economics and federalism research. Recommendations include federal coordination mechanisms for conflict containment and economically targeted spillover compensation for affected non-conflict states.

Keywords: conflict spillovers, spatial economics, Nigerian states, conflict economics, original framework