Business as Unusual. An Explanation of the Increase of Private Economic Activity in High-Conflict Areas in Afghanistan

Tommaso Ciarli, Chiara Kofol and Carlo Menon ()

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: In this paper we use a unique dataset that combines spatial detailed information on conflict events and on households' activity, to show a positive and significant correlation between violent conflict and entrepreneurship in Afghanistan. We build spatial and IV identifications to estimate the effect of different measures of conflict on the investment in a range of private economic activities of nearby households. The results consistently show that the level of conflict, its impact, and to a lesser extent its frequency, increase the probability that a household engages in self-employment activities with lower capital intensity and in activities related to subsistence agriculture, and reduce the probability of investing in higher capital self-employment. Overall, by increasing entrepreneurship, conflict pushes the country towards a regressive structural change. However, the magnitude of most of the effects is quite small. The paper contributes to a literature that, due to data constraints and identification issues, has not yet delivered conclusive evidence.

Keywords: Violent conflict; entrepreneurship; development (search for similar items in EconPapers)
JEL-codes: D74 L26 O12 R12 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Business as unusual. An explanation of the increase of private economic activity in high-conflict areas in Afghanistan (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:sercdp:0182

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