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Impact of Terrorism on Investment Decisions of Farmers


  • Prakarsh Singh


This article provides evidence for a particular channel through which sustained terrorism in rural areas may affect growth in developing countries. Using micro-level data from agricultural surveys during the period of insurgency in Punjab (India), I find significant negative effects of terrorism on the level of investment in long-term agricultural technology, but effects are small and insignificant for short-term investment. The presence of a major terrorist incident in a district in a year reduces long-term fixed investment by around 17 percent after controlling for district fixed-effects, time trends, district trends, and other farm-level controls. These negative effects are greater for richer farmers and those living in bordering districts. This results in a farmer losing close to 4 percent of his income annually because of the insurgency.

Suggested Citation

  • Prakarsh Singh, 2013. "Impact of Terrorism on Investment Decisions of Farmers," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 143-168, February.
  • Handle: RePEc:sae:jocore:v:57:y:2013:i:1:p:143-168

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    References listed on IDEAS

    1. Camilo Mondragón-Vélez & Ximena Peña, 2010. "Business Ownership and Self-Employment in Developing Economies: The Colombian Case," NBER Chapters,in: International Differences in Entrepreneurship, pages 89-127 National Bureau of Economic Research, Inc.
    2. Demirguc-Kunt, Asli & Klapper, Leora F. & Panos, Georgios A., 2009. "Entrepreneurship in post-conflict transition : the role of informality and access to finance," Policy Research Working Paper Series 4935, The World Bank.
    3. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
    4. Sindy A. González & Héctor J. Villarreal, 2006. "More Pushed than Pulled: Self-employment in rural Mexico ten years after NAFTA," Working Papers 20063, Escuela de Graduados en Administración Pública y Políticas Públicas, Campus Monterrey, revised Nov 2006.
    5. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2005. "Entrepreneurship Selection and Performance: A Meta-Analysis of the Impact of Education in Developing Economies," World Bank Economic Review, World Bank Group, vol. 19(2), pages 225-261.
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    Cited by:

    1. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part I)," Discussion Papers of DIW Berlin 1049, DIW Berlin, German Institute for Economic Research.
    2. Singhal, Saurabh & Nilakantan, Rahul, 2016. "The economic effects of a counterinsurgency policy in India: A synthetic control analysis," European Journal of Political Economy, Elsevier, vol. 45(C), pages 1-17.
    3. Nillesen, Eleonora, 2016. "Empty cups? Assessing the impact of civil war violence on coffee farming in Burundi," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), March.
    4. Haider, Murtaza & Anwar, Amar, 2014. "Impact of terrorism on FDI flows to Pakistan," MPRA Paper 57165, University Library of Munich, Germany.
    5. Singh, Prakarsh & Shemyakina, Olga N., 2016. "Gender-differential effects of terrorism on education: The case of the 1981–1993 Punjab insurgency," Economics of Education Review, Elsevier, vol. 54(C), pages 185-210.
    6. Thiemo Fetzer, 2014. "Can Workfare Programs Moderate Violence? Evidence from India," STICERD - Economic Organisation and Public Policy Discussion Papers Series 53, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. Adelaja, Adesoji, 2016. "Agriculture, Inclusive Growth and National Stability:," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235909, Agricultural and Applied Economics Association.
    8. Sameeksah Desai & Zoltán J. Ács & Utz Weitzel, 2015. "A Model of Destructive Entrepreneurship: Insight for Conflict and Postconflict Recovery," Chapters,in: Global Entrepreneurship, Institutions and Incentives, chapter 1, pages 3-23 Edward Elgar Publishing.
    9. Adelaja, Adesoji O., 2016. "Agriculture, Inclusive Growth And National Stability:," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 242359, Agricultural and Applied Economics Association.

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    terrorism; investment; Punjab;


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