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Firm Exit and Armed Conflict in Colombia

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  • Camacho, Andriana
  • Rodriguez, Catherine

Abstract

This paper uses two unique panel data sets to study the causal effect that armed conflict has over entrepreneurial activity in Colombia. Using a fixed effect estimation methodology at the plant level and controlling for the possible endogeneity of armed conflict through the use of instrumental variables, we find that a one standard deviation in the number of guerrilla and paramilitary attacks in a municipality increases the probability of firm exit in 8.1 percentage points. This effect is stronger for smaller plants and has a differential impact with respect to firms’ age.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2010/wp2010-94.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number wp2010-94.

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Length: 30 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:unu:wpaper:wp2010-94

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Keywords: conflict; firm exit; entrepreneurship; Colombia;

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References

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  1. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitabality enhancing reallocation: evidence from Colombia," Discussion Paper Series In Economics And Econometrics 0408, Economics Division, School of Social Sciences, University of Southampton.
  2. Olga Shemyakina, 2006. "The Effect of Armed Conflict on Accumulation of Schooling: Results from Tajikistan," HiCN Working Papers 12, Households in Conflict Network.
  3. Alvarez, Roberto & Görg, Holger, 2005. "Multinationals and Plant Exit: Evidence from Chile," IZA Discussion Papers 1611, Institute for the Study of Labor (IZA).
  4. Alvaro J. Riascos & Juan F. Vargas, 2011. "Violence and growth in colombia: a review of the quantitative literature," DOCUMENTOS DE TRABAJO 008806, UNIVERSIDAD DEL ROSARIO.
  5. Alejandro Gaviria Uribe, 2002. "Assessing the Effects of Corruption and Crime on Firm. Performance: Evidence from Latin America," INFORMES DE INVESTIGACIÓN 002031, FEDESARROLLO.
  6. Joshua D. Angrist & Adriana Kugler, 2005. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," NBER Working Papers 11219, National Bureau of Economic Research, Inc.
  7. Adriana Camacho, 2008. "Stress and Birth Weight: Evidence from Terrorist Attacks," American Economic Review, American Economic Association, vol. 98(2), pages 511-15, May.
  8. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  9. Catherine rodríguez & fabio s�nchez, 2012. "Armed Conflict Exposure, Human Capital Investments, And Child Labor: Evidence From Colombia," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(2), pages 161-184, April.
  10. Philip Verwimp & Tom Bundervoet, 2008. "Consumption Growth, Household Splits and Civil War," Working Papers ECARES 2008_023, ULB -- Universite Libre de Bruxelles.
  11. Murat Iyigun & Dani Rodrik, 2004. "On the Efficacy of Reforms: Policy Tinkering, Institutional Change, and Entrepreneurship," NBER Working Papers 10455, National Bureau of Economic Research, Inc.
  12. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
  13. Daniel Mejía & Carlos Esteban Posada, 2003. "Capital Destruction, Optimal Defense and Economic Growth," BORRADORES DE ECONOMIA 002096, BANCO DE LA REPÚBLICA.
  14. 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.).
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Citations

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Cited by:
  1. Lemus Natalia, 2014. "Conflict-Induced Poverty: Evidence from Colombia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(1), pages 113-142, January.
  2. Juan Fernando Vargas & Luis Fernando Gamboa & Viviana Garcia, 2014. "El lado oscuro de la equidad: Violencia y equidad en el desempeño escolar," DOCUMENTOS DE TRABAJO 011190, UNIVERSIDAD DEL ROSARIO.
  3. Alvaro J. Riascos & Juan F. Vargas, 2011. "Violence and growth in Colombia: A review of the quantitative literature," Economics of Peace and Security Journal, Economists for Peace and Security (UK), vol. 6(2), pages 15-20, July.
  4. Carly Petracco & Helena Schweiger, 2012. "The impact of armed conflict on firms’ performance and perceptions," Working Papers 152, European Bank for Reconstruction and Development, Office of the Chief Economist.
  5. 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.
  6. Bruck, Tilman & Naude, Wim & Verwimp, Philip, 2013. "Entrepreneurship and violent conflict in developing countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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