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Business as unusual. An explanation of the increase of private economic activity in high-conflict areas in Afghanistan

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posted on 2023-06-08, 22:49 authored by Tommaso CiarliTommaso Ciarli, Chiara Kofol, Carlo Menon
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.

History

Publication status

  • Published

File Version

  • Published version

Publisher

SERC, LSE

Pages

55.0

Place of publication

London

Series

SERC Discussion Paper

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Institution

SERC, LSE

Full text available

  • No

Legacy Posted Date

2015-10-16

First Compliant Deposit (FCD) Date

2016-03-22

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