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The Impact of the Mexican Drug War on Trade

Author

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  • Jose Ramon Morales Arilla

    (Center for International Development at Harvard University)

Abstract

This paper studies the unintended economic consequences of increases in violence following the Mexican Drug War. We study the effects on exports in municipalities with different levels of exposure to violence after the policy. A focus on exports allows us to control for demand shocks by comparing exports of the same product to the same country of destination. Building on the close elections identification strategy proposed by Dell (2015), we show that municipalities that are exogenously exposed to the Drug War experience a 40% decrease in export growth on the in- tensive margin. Large exporters suffer larger effects, along with exports of more complex, capital intensive, and skill intensive products. Finally, using firm level data, we provide evidence consistent with violence increasing marginal exporting costs.

Suggested Citation

  • Jose Ramon Morales Arilla, 2019. "The Impact of the Mexican Drug War on Trade," CID Working Papers 109a, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:109a
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    File URL: https://growthlab.cid.harvard.edu/files/growthlab/files/2019-02-cid-fellows-wp-109-mexican-drug-war.pdf
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    References listed on IDEAS

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    Cited by:

    1. Daniel Osuna Gómez, 2021. "The Impact of the Capture of Leaders of Criminal Organizations on the Labor Market: Evidence from Mexico," Working Papers 2021-19, Banco de México.

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    More about this item

    Keywords

    Exports; Violence; Mexico; Regression Discontinuity;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • N76 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Latin America; Caribbean

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