The good news is that history suggests that the destruction of war has no lasting impact on economic prospects. The bad news is that most of these countries, especially Iraq, are filled with ethnic divisions and civil discord. The evidence shows that these problems, unlike bombs, cause lasting damage to the prospects for a nation’s economy, even if they do not boil over into civil war.
We provide two measures never before used in econometric analysis of comparative development. One is relatively simple and captures whether or not an ethnic group is "cut" by a political border line. That is, we measure situations in which the same ethnic group is present in two bordering countries. This measure accounts fairly precisely for one of the ways in which borders may be "wrong", that is when they cut through groups left in separate countries. But it does not capture other ways in which borders may be undesirable; for instance situations in which two ethnic groups are forced into the same country. We then provide a second measure, based upon the assumption that if a land border is close to a straight line it is more likely to be drawn artificially i.e. by former colonizers; if it is relatively squiggly it is more likely to represent either geographic features (rivers, mountains etc.) and/or represent divisions carved out in time to separate different people.
...For the partitioned variable, going from the 75th most partitioned country to the 25th most partititioned country is associated with an increase of 83% in GDP per capita ... Moving from the 75th most squiggly border to the 25th most squiggly border is associated with a 37% increase in GDP per capita.
There is a lot to ponder here. What to make of India, for example? It ought to be a failed state, given its ethnic heterogeneity. But is it a failed state?
I think I would be more comfortable with an analysis of countries within sub-Saharan Africa or the Middle East than with a study that in effect compares those regions with the rest of the world.