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Peaceful Entry: Entrepreneurship Dynamics During Colombia s Peace Agreement

C Bernal (), M Ortiz (), Mounu Prem and Juan Vargas

No 19938, Documentos de Trabajo from Universidad del Rosario

Abstract: While there is a large literature on how conflict affects entrepreneurship and private investment, much less is known about how the end of a conflict affects businesses and firms’ creation. A priory, the direction of the effect is not obvious, as conflicts bequest poverty traps and inequality that reduce the returns of investment, and the territorial vacuum of power that is inherent to most post-conflict situations may trigger new violent cycles. Studying Colombia’s recent peace agreement and using a difference-in-differences empirical strategy, we document that dynamics of entrepreneurship in traditionally violent areas closely mapped the politics that surrounded the peace agreement. When the agreement was imminent after a 5-decade conflict and violence had plummeted, local investors from all economic sectors established new firms and created more jobs. Instead, when the agreement was rejected by a tiny vote margin in a referendum and the party that promoted this rejection raised to power, the rate of firms’ creation rapidly reversed.

Keywords: Firm entry; Conflict; Peace agreement; Colombia (search for similar items in EconPapers)
JEL-codes: D22 D74 (search for similar items in EconPapers)
Pages: 39
Date: 2022-01-20
New Economics Papers: this item is included in nep-ent, nep-his and nep-lam
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