Firm Growth in Conflict Countries: Some Evidence from South Asia
This paper provides robust evidence on feedback effects of violent conflicts on firm growth. It uses South Asian firm level data that contain rare employment information on countries that experience severe conflicts. We show that firm growth exists in conflict areas. Yet, there are fewer expanding firms. They tend to grow slower than firms in other countries in the region, and firms that shed staff decline faster. Particularly firms in urban conflict areas were performing less dynamically. The results point at severe investment climate issues in conflict countries, which imply a lower degree of industrial and productivity dynamics in afflicted regions.
Volume (Year): 3 (2013)
Issue (Month): (May)
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