Conflict and the composition of economic activity in Afghanistan

Virgilio Galdo, Acevedo Gladys Lopez () and Martin Rama
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Acevedo Gladys Lopez: All author are with The World Bank.

IZA Journal of Development and Migration, 2021, vol. 12, issue 1, 23

Abstract: Despite informality being the norm in conflict-affected countries, most estimates of the impact of conflict on economic activity rely on formal sector data. Using high-frequency data from Afghanistan, this paper assesses how surges in conflict intensity affect not only the formal sector, but also informal and illicit activities. Nighttime light provides a proxy for aggregate economic activity, mobile phone traffic by registered firms captures fluctuations in formal sector output, and the land surface devoted to poppy cultivation gives a measure of illicit production. The unit of observation is the district and the period of reference is 2012–2016. The results show that an increase in conflict-related casualties has a strong negative impact on formal economic activity in the following quarter and a positive effect on illicit activity after two quarters. The impact on aggregate economic activity is negative, but more muted.

Keywords: Afghanistan; conflict; economic activity (search for similar items in EconPapers)
JEL-codes: D74 E21 F35 I32 O17 (search for similar items in EconPapers)
Date: 2021
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https://doi.org/10.2478/izajodm-2021-0010 (text/html)

Related works:
Working Paper: Conflict and the Composition of Economic Activity in Afghanistan (2020)
Working Paper: Conflict and the Composition of Economic Activity in Afghanistan (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:izajdm:v:12:y:2021:i:1:p:23:n:11

DOI: 10.2478/izajodm-2021-0010

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