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Guns and Roses: The Impact of the Kenyan Post-Election Violence on Flower Exporting Firms

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  • Christopher Ksoll
  • Rocco Macchiavello
  • Ameet Morjaria

Abstract

While 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 Info

Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2009-06.

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Date of creation: 2009
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Handle: RePEc:csa:wpaper:2009-06

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Keywords: Ethnic Violence; Non-traditional Agriculture; Export Oriented Industry; Kenya;

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Cited by:
  1. Roxana Gutiérrez-Romero, 2012. "An Inquiry into the Use of Illegal Electoral Practices and Effects of Political Violence," Working Papers, Department of Applied Economics at Universitat Autonoma of Barcelona wpdea1210, Department of Applied Economics at Universitat Autonoma of Barcelona.
  2. Muhammad, Andrew & D'Souza, Anna & Amponsah, William A., 2011. "Violence, Political Instability, and International Trade: Evidence from Kenya’s Cut Flower Sector," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania, Agricultural and Applied Economics Association 118374, Agricultural and Applied Economics Association.
  3. Timothy Besley & Marta Reynal-Querol, 2012. "The Legacy of Historical Conflict Evidence from Africa," STICERD - Economic Organisation and Public Policy Discussion Papers Series, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 036, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  4. Muhammad, Andrew & D’Souza, Anna & Amponsah, William, 2013. "Violence, Instability, and Trade: Evidence from Kenya’s Cut Flower Sector," World Development, Elsevier, Elsevier, vol. 51(C), pages 20-31.
  5. Stefan Dercon & Roxana Gutierrez-Romero, 2010. "Triggers and Characteristics of the 2007 Kenyan Electoral Violence," Economics Series Working Papers, University of Oxford, Department of Economics CSAE WPS/2010-12, University of Oxford, Department of Economics.

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