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Beyond the Overall Economic Downturn: Evidence on Sector-Specific Effects of Violent Conflict from Indonesia

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Author Info

  • Marc Vothknecht
  • Sudarno Sumarto

Abstract

This paper analyses the impact of violent conflict on economic growth using micro-level data from Indonesia. We compile a panel dataset at district level for the period 2002-2008, and disentangle the overall negative economic effect of violent conflict into its sectoral components. Our results reveal substantial differences across sectors, with the most detrimental impact evident in manufacturing industries and the service sectors. Further, the short-run impacts on growth appear to be only temporal, and some evidence for the 'phoenix effect' in the early post-conflict period is found. The construction sector, in particular, recovers soon once conflict ends, while manufacturing industries and the finance sector appear especially reliant on a lasting peace. A series of alternative specifications confirm the main findings of the analysis.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.368770.de/dp1105.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1105.

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Length: 38 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwwpp:dp1105

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Keywords: Violent conflict; economic growth; Indonesia;

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  1. Olaf De Groot, 2010. "The Spillover Effects Of Conflict On Economic Growth In Neighbouring Countries In Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(2), pages 149-164.
  2. Depetris Chauvin, Nicolas & Rohner, Dominic, 2009. "The Effects of Conflict on the Structure of the Economy," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 6, Verein für Socialpolitik, Research Committee Development Economics.
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Cited by:
  1. Bove, Vincenzo & Gavrilova, Evelina, 2014. "Income and Livelihoods in the War in Afghanistan," World Development, Elsevier, vol. 60(C), pages 113-131.

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