Economic consequences of the US invasion of Iraq: A comparative study using the difference-in-difference model

This study examines the socioeconomic impacts of the U.S. invasion of Iraq in 2003, focusing on Iraq's performance relative to that of Saudi Arabia and Algeria across key indicators during three distinct periods: preinvasion (1990–2002), invasion (2003–2010), and postinvasion (2011–2023). With the use of a difference-in-differences (DID) methodology, the analysis highlights significant findings. Compared with Saudi Arabia, Iraq experienced temporary GDP growth during the invasion period because of reconstruction efforts but faced severe declines in GDP per capita and sustained inflationary pressures postinvasion, as evidenced by a 30.6% drop in GDP per capita relative to Saudi Arabia. Oil production recovery remained mixed; Iraq outperformed Algeria, with a 45.1% increase in the postinvasion period, yet struggled to achieve comparable growth to that of Saudi Arabia. Human development index (HDI) trends revealed limited progress for Iraq, with persistent disparities compared with both Saudi Arabia and Algeria, exacerbated by challenges in education and healthcare. Additionally, Iraq's CO₂ emissions per capita declined by 79.3% relative to those of Saudi Arabia postinvasion, indicating weakened industrial activity rather than environmental progress. The study underscores the compounded effects of conflict, governance challenges, and economic instability, offering valuable policy insights for postconflict recovery and sustainable development.