Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency

Prakarsh Singh

MPRA Paper from University Library of Munich, Germany

Abstract: This paper provides evidence for a particular channel through which sustained terrorism in rural areas may affect growth in developing countries. Using micro-level data from agricultural surveys during the period of insurgency in Punjab (India), I find significant negative effects of terrorism on the level of investment in long-term agricultural technology but effects are small and insignificant for short-term investment. The presence of a major terrorist incident in a district in a year reduces long-term fixed investment by around 17% after controlling for district fixed-effects, time trends, district trends and other farm-level controls. These negative effects are greater for richer farmers and those living in bordering districts. This results in a farmer losing close to 4% of his income annually because of the insurgency.

Keywords: Terrorism; Rural Conflict; Violence; Investment; Agriculture; Farmers; Punjab (search for similar items in EconPapers)
JEL-codes: D21 D74 D92 O13 O16 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-agr and nep-hme
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Citations: View citations in EconPapers (22)

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