Guns and Roses: The Impact of the Kenyan Post-Election Violence on Flower Exporting Firms
AbstractWhile political instability is broadly believed to be bad for economic growth., firm performance and foreign direct investment, few studies convincingly identify the causal impact of conflict on firms and export performance. In this paper, we analyze the impact of the Kenyan post-election violence on a hugely successful export oriented industry, the Kenyan flower industry,. Using export information on all Kenyan grower-exporters, we show that the conflict reduced Kenyan flowere exports by 24% overall. To account for demand shocks in the export markets, we then exploit the cross-regional variation in the post-election violence to identify the effect of the conflict on firms export volumes. We find that the conflict reduced exports by 23% for firms located in conflict areas, mainly through displacing workers. The displacement of semi-skilled workers is also shown to have had impacts substantially beyond the duration of the conflict. While there is no evidence to suggest that the conflict affected export volumes in the areas without conflict, we find evidence that it did change exporters behaviour. Shipments were consolidated and exported less frequently, while security expenses rose. This suggests that exporters in non-conflict areas reacted to the increased insecurity by transporting larger, more secured shipments to the airport less frequently.
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Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2009-06.
Date of creation: 2009
Date of revision:
Ethnic Violence; Non-traditional Agriculture; Export Oriented Industry; Kenya;
Other versions of this item:
- Christopher Ksoll & Rocco Macchiavello & Ameet Morjaria, 2009. "Guns and Roses: The Impact of the Kenyan Post-Election Violence on Flower Exporting Firms," Economics Series Working Papers CSAE WPS/2009-06, University of Oxford, Department of Economics.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
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