IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v166y2024ics0304387823000743.html
   My bibliography  Save this article

Peaceful entry: Entrepreneurship dynamics during Colombia’s peace agreement

Author

Listed:
  • Bernal, Carolina
  • Prem, Mounu
  • Vargas, Juan F.
  • Ortiz, Mónica

Abstract

The end of internal conflict is often shaped by political uncertainty and threats of violence recurrence. This implies that the effects of conflict termination on economic activity and specifically entrepreneurship can go in either direction, and we know little about this relationship. Studying Colombia’s recent peace agreement with the FARC guerrilla, 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 jobs. Instead, when the agreement was rejected in a referendum, the party that promoted this rejection raised to power, and violence re-escalated, the rate of firms’ creation rapidly reversed.

Suggested Citation

  • Bernal, Carolina & Prem, Mounu & Vargas, Juan F. & Ortiz, Mónica, 2024. "Peaceful entry: Entrepreneurship dynamics during Colombia’s peace agreement," Journal of Development Economics, Elsevier, vol. 166(C).
    • Handle: RePEc:eee:deveco:v:166:y:2024:i:c:s0304387823000743
    DOI: 10.1016/j.jdeveco.2023.103119
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304387823000743
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jdeveco.2023.103119?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    2. Prem, Mounu & Purroy, Miguel E & Vargas, Juan F., 2021. "Landmines: The Local Effects of Demining," Working papers 86, Red Investigadores de Economía.
    3. Karthik Muralidharan & Nishith Prakash, 2017. "Cycling to School: Increasing Secondary School Enrollment for Girls in India," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 321-350, July.
    4. Tilman Brück & Wim Naudé & Philip Verwimp, 2013. "Business under Fire: Entrepreneurship and Violent Conflict in Developing Countries," ULB Institutional Repository 2013/167759, ULB -- Universite Libre de Bruxelles.
    5. Alexandre Belloni & Victor Chernozhukov & Christian Hansen, 2014. "High-Dimensional Methods and Inference on Structural and Treatment Effects," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 29-50, Spring.
    6. Pieter Serneels & Marijke Verpoorten, 2015. "The Impact of Armed Conflict on Economic Performance," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(4), pages 555-592, June.
    7. Perilla, Sergio & Prem, Mounu & Purroy, Miguel E. & Vargas, Juan F., 2024. "How peace saves lives: Evidence from Colombia," World Development, Elsevier, vol. 176(C).
    8. Maldonado, Jorge H. & Moreno-Sánchez, Rocío del Pilar & Espinoza, Sophía & Bruner, Aaron & Garzón, Natalia & Myers, John, 2018. "Peace is much more than doves: The economic benefits of bird-based tourism as a result of the peace treaty in Colombia," World Development, Elsevier, vol. 106(C), pages 78-86.
    9. Mueller, Pamela, 2006. "Exploring the knowledge filter: How entrepreneurship and university-industry relationships drive economic growth," Research Policy, Elsevier, vol. 35(10), pages 1499-1508, December.
    10. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    11. Mounu Prem & Juan F. Vargas & Olga Namen, 2023. "The Human Capital Peace Dividend," Journal of Human Resources, University of Wisconsin Press, vol. 58(3), pages 962-1002.
    12. Rony Pshisva & Gustavo A. Suárez F., 2006. "Captive Markets: the Impact of Kidnappings on Corporate Investment in Colombia," Coyuntura Económica, Fedesarrollo, June.
    13. M.A. Carree & A.R. Thurik, 2008. "The Lag Structure of the Impact of Business Ownership on Economic Performance in OECD Countries," Small Business Economics, Springer, vol. 30(1), pages 101-110, January.
    14. Prem, M & Guerra, M. E. & Rodríguez, P & Vargas, J. F., 2020. "The Peace Baby Boom: Evidence from Colombia’s peace agreement with the FARC," Documentos de Trabajo 18430, Universidad del Rosario.
    15. Rony Pshisva & Gustavo A. Suarez, 2006. "'Captive markets': the impact of kidnappings on corporate investment in Colombia," Finance and Economics Discussion Series 2006-18, Board of Governors of the Federal Reserve System (U.S.).
    16. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 1-19.
    17. Zoltan J. Acs & Attila Varga, 2008. "Entrepreneurship, Agglomeration and Technological Change," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 24, pages 341-352, Edward Elgar Publishing.
    18. Singh, Prakarsh, 2011. "Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency," MPRA Paper 33328, University Library of Munich, Germany.
    19. Hale Utar, 2018. "Firms and Labor in Times of Violence: Evidence from the Mexican Drug War," CESifo Working Paper Series 7345, CESifo.
    20. Massimo Guidolin & Eliana La Ferrara, 2007. "Diamonds Are Forever, Wars Are Not: Is Conflict Bad for Private Firms?," American Economic Review, American Economic Association, vol. 97(5), pages 1978-1993, December.
    21. Mounu Prem & Andrés F. Rivera & Dario A. Romero & Juan F. Vargas, 2022. "Selective Civilian Targeting: The Unintended Consequences of Partial Peace," Quarterly Journal of Political Science, now publishers, vol. 17(3), pages 317-354, July.
    22. Francesco Amodio & Michele Di Maio, 2018. "Making Do With What You Have: Conflict, Input Misallocation and Firm Performance," Economic Journal, Royal Economic Society, vol. 128(615), pages 2559-2612, November.
    23. Jorge Restrepo & Michael Spagat & Juan Vargas, 2004. "The Dynamics of the Columbian Civil Conflict: A New Dataset," Homo Oeconomicus, Institute of SocioEconomics, vol. 21, pages 396-429.
    24. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
    25. Sandra V. Rozo, 2018. "Is Murder Bad for Business? Evidence from Colombia," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 769-782, December.
    26. Leopoldo Fergusson, 2019. "Who wants violence? The political economy of conflict and state building in Colombia," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 38(78), pages 671-700, November.
    27. Boeri, Tito & Cramer, Ulrich, 1992. "Employment growth, incumbents and entrants : Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 545-565, December.
    28. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
    29. Prem, Mounu & Saavedra, Santiago & Vargas, Juan F., 2020. "End-of-conflict deforestation: Evidence from Colombia’s peace agreement," World Development, Elsevier, vol. 129(C).
    30. André Stel & Kashifa Suddle, 2008. "The impact of new firm formation on regional development in the Netherlands," Small Business Economics, Springer, vol. 30(1), pages 31-47, January.
    31. Adriana Camacho & Catherine Rodriguez, 2013. "Firm Exit and Armed Conflict in Colombia," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 89-116, February.
    32. S. Brock Blomberg & Gregory D. Hess, 2002. "The Temporal Links between Conflict and Economic Activity," Journal of Conflict Resolution, Peace Science Society (International), vol. 46(1), pages 74-90, February.
    33. Marc F. Bellemare & Casey J. Wichman, 2020. "Elasticities and the Inverse Hyperbolic Sine Transformation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(1), pages 50-61, February.
    34. Olaf J de Groot & Carlos Bozzoli & Anousheh Alamir & Tilman Brück, 2022. "The global economic burden of violent conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 59(2), pages 259-276, March.
    35. Sant’Anna, Pedro H.C. & Zhao, Jun, 2020. "Doubly robust difference-in-differences estimators," Journal of Econometrics, Elsevier, vol. 219(1), pages 101-122.
    36. Baldwin, John & Picot, Garnett, 1995. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Small Business Economics, Springer, vol. 7(4), pages 317-331, August.
    37. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    38. Anja Shortland & Katerina Christopoulou & Charalampos Makatsoris, 2013. "War and famine, peace and light? The economic dynamics of conflict in Somalia 1993–2009," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(5), pages 545-561, September.
    39. Klapper, Leora & Richmond, Christine & Tran, Trang, 2013. "Civil conflict and firm performance : evidence from Cote d'Ivoire," Policy Research Working Paper Series 6640, The World Bank.
    40. Prakarsh Singh, 2013. "Impact of Terrorism on Investment Decisions of Farmers," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 143-168, February.
    41. Paul Collier & Marguerite Duponchel, 2013. "The Economic Legacy of Civil War," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 65-88, February.
    42. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2004. "Entry and Productivity Growth: Evidence from Microlevel Panel Data," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 265-276, 04/05.
    43. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    44. Brück, Tilman & Llussá, Fernanda & Tavares, José A., 2011. "Entrepreneurship: The role of extreme events," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 78-88.
    45. Brian Ashcroft & James H. Love, 1996. "Firm Births And Employment Change In The British Counties: 1981–89," Papers in Regional Science, Wiley Blackwell, vol. 75(4), pages 483-500, October.
    46. Pamela Mueller & André Stel & David Storey, 2008. "The effects of new firm formation on regional development over time: The case of Great Britain," Small Business Economics, Springer, vol. 30(1), pages 59-71, January.
    47. Toomet,Ott & Blumenstock,Joshua Evan & Scherer,Thomas & Herskowitz,Sylvan Rene & Ghani,Tarek F. & Kapstein,Ethan B., 2018. "Insecurity and industrial organization : evidence from Afghanistan," Policy Research Working Paper Series 8301, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miguel Fajardo-Steinhauser, 2023. "Peace Dividends: The Economic Effects of Colombia's Peace Agreement," Papers 2301.01843, arXiv.org.
    2. Guerra-Cújar, María Elvira & Prem, Mounu & Rodriguez-Lesmes, Paul & Vargas, Juan F., 2020. "The Peace Baby Boom: Evidence from Colombia’s peace agreement with FARC," SocArXiv c2ypd, Center for Open Science.
    3. Perilla, Sergio & Prem, Mounu & Purroy, Miguel E. & Vargas, Juan F., 2024. "How peace saves lives: Evidence from Colombia," World Development, Elsevier, vol. 176(C).
    4. Del Prete, Davide & Di Maio, Michele & Rahman, Aminur, 2023. "Firms amid conflict: Performance, production inputs, and market competition," Journal of Development Economics, Elsevier, vol. 164(C).
    5. Mora-Garcia, Claudio A & Prem, Mounu & Rodriguez-Lesmes, Paul & Vargas, Juan F., 2024. "Health Workforce Reallocation in the Aftermath of Conflict: Evidence from Colombia," Documentos de Trabajo 21124, Universidad del Rosario.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Perilla, Sergio & Prem, Mounu & Purroy, Miguel E. & Vargas, Juan F., 2024. "How peace saves lives: Evidence from Colombia," World Development, Elsevier, vol. 176(C).
    2. Prem, Mounu & Purroy, Miguel E & Vargas, Juan F., 2021. "Landmines: The Local Effects of Demining," Working papers 86, Red Investigadores de Economía.
    3. Del Prete, Davide & Di Maio, Michele & Rahman, Aminur, 2023. "Firms amid conflict: Performance, production inputs, and market competition," Journal of Development Economics, Elsevier, vol. 164(C).
    4. Florian Leon & Ibrahima Dosso, 2020. "Civil conflict and firm recovery: Evidence from post-electoral crisis in Côte d'Ivoire," Working Papers hal-02865559, HAL.
    5. Francesco Amodio & Michele Di Maio, "undated". "Making Do with What You Have: Conflict, Firm Performance and Input Misallocation in Palestine," Development Working Papers 379, Centro Studi Luca d'Agliano, University of Milano.
    6. Mounu Prem & Juan F. Vargas & Olga Namen, 2023. "The Human Capital Peace Dividend," Journal of Human Resources, University of Wisconsin Press, vol. 58(3), pages 962-1002.
    7. Mora, Claudio & Prem, Mounu & Rodriguez-Lesmes, Paul & Vargas, Juan F., 2024. "Health Workforce Reallocation in the Aftermath of Conflict: Evidence from Colombia," SocArXiv 2dwfu, Center for Open Science.
    8. Prem, M & Guerra, M. E. & Rodríguez, P & Vargas, J. F., 2020. "The Peace Baby Boom: Evidence from Colombia’s peace agreement with the FARC," Documentos de Trabajo 18430, Universidad del Rosario.
    9. Mounu Prem & Juan F. Vargas & Daniel Mejía, 2023. "The Rise and Persistence of Illegal Crops: Evidence from a Naive Policy Announcement," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 344-358, March.
    10. Thomas Neumann, 2021. "The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review," Management Review Quarterly, Springer, vol. 71(3), pages 553-584, July.
    11. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    12. Michael Fritsch & Florian Noseleit, 2009. "Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth," Jena Economics Research Papers 2009-081, Friedrich-Schiller-University Jena.
    13. Laurent WAGNER, 2020. "The allocation of resources of national development banks," Working Paper 9c3d4298-95e5-4561-a9cb-5, Agence française de développement.
    14. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    15. Novta, Natalija & Pugacheva, Evgenia, 2021. "The macroeconomic costs of conflict," Journal of Macroeconomics, Elsevier, vol. 68(C).
    16. Nicolás de Roux & Luis Roberto Martínez, 2021. "Forgone Investment: Civil Conflict and Agricultural Credit in Colombia," Documentos CEDE 19236, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Heike Delfmann & Sierdjan Koster, 2016. "The effect of new business creation on employment growth in regions facing population decline," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 33-54, January.
    18. Hönig, Tillman, 2017. "The Impact of Peace: Evidence from Nigeria," MPRA Paper 83302, University Library of Munich, Germany.
    19. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    20. Nicolás de Roux & Luis Martínez, 2021. "Inversión Perdida: Conflicto Civil y Crédito Agrícola en Colombia," Documentos CEDE 19622, Universidad de los Andes, Facultad de Economía, CEDE.

    More about this item

    Keywords

    Firm entry; Conflict; Peace agreement; Colombia;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:166:y:2024:i:c:s0304387823000743. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.