Insecurity and Industrial Organization : Evidence from Afghanistan
One-fifth of the world's population lives in countries affected by fragility, violence and conflict, impeding long-term economic growth. However, little is known about how firms respond to local changes in security, partly because of the diffi...
| Main Authors: | , , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/929591516198334068/Insecurity-and-industrial-organization-evidence-from-Afghanistan http://hdl.handle.net/10986/29211 |
| Summary: | One-fifth of the world's population
lives in countries affected by fragility, violence and
conflict, impeding long-term economic growth. However,
little is known about how firms respond to local changes in
security, partly because of the difficulty of measuring firm
activity in these settings. This paper presents a novel
methodology for observing private sector activity using
mobile phone metadata. Using Afghanistan as the empirical
setting, the analysis combines mobile phone data from over
2,300 firms with data from several other sources to develop
and validate measures of firm location, size, and economic
activity. Combining these new measures of firm activity with
geocoded data on violent events, the paper investigates how
the private sector in Afghanistan responds to insecurity.
The findings indicate that firms reduce presence in
districts following major increases in violence, that these
effects persist for up to six months, and that larger firms
are more responsive to violence. The paper concludes with a
discussion of potential mechanisms, firms' strategic
adaptations, and implications for policymakers. |
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