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

Ciarli, Tommaso, Kofol, Chiara and Menon, Carlo (2015) Business as unusual. An explanation of the increase of private economic activity in high-conflict areas in Afghanistan. SERC discussion papers (SERCDP0182). Spatial Economics Research Centre, London, UK.

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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.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://www.spatialeconomics.ac.uk/
Additional Information:	© 2015 The Authors
Divisions:	Spatial Economics Research Centre
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce
JEL classification:	D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict; Conflict Resolution; Alliances O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Date Deposited:	15 Jan 2016 11:50
Last Modified:	11 Dec 2024 19:19
Funders:	Economic and Social Research Council, Department for Business, Innovation & Skills, Welsh Government
URI:	http://eprints.lse.ac.uk/id/eprint/65015

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