The possibility of war in Iraq has already affected the economy, leading to higher oil prices, lower share prices and a weaker dollar. But how might developing countries be affected if the war does happen? This report from Andrew Walker:
Most developing countries import oil. So the persistence of relatively high oil prices - partly due to the international tension over Iraq - is very unwelcome to them. It is particularly an issue for those that have made large strides in industrial development, the sector of the economy that tends to consume the most energy. Thailand and Korea are examples of countries whose economies clearly suffer from high oil prices. How much damage they sustain, depends on how much higher prices go and how long they stay high.
Developing countries would also suffer if a war undermines economic performance in the rich countries. These are important markets for the goods produced by developing nations. Weaker rich economies would also undermine the prices of the commodities that many people in the developing world depend on for their livelihood. And then there are the foreign nationals working in the Gulf region, many of them from South or East Asia, who send money home to their families. A war might persuade some to return or disrupt their employment in the region.
Some developing countries might be better off - those that produce oil. In the Gulf there will be some gains from oil prices to offset the regional disruption. Elsewhere, Venezuela, Russia and oil producers in Africa could make a lot more money while prices remain relatively high.