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Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency

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  • Singh, Prakarsh

Abstract

This paper 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% 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% of his income annually because of the insurgency.

Suggested Citation

  • Singh, Prakarsh, 2011. "Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency," MPRA Paper 33328, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:33328
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    Citations

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    Cited by:

    1. Ciarli, Tommaso & Kofol, Chiara & Menon, Carlo, 2015. "Business as unusual. An explanation of the increase of private economic activity in high-conflict areas in Afghanistan," LSE Research Online Documents on Economics 65015, London School of Economics and Political Science, LSE Library.
    2. Addison Tony & Niño-Zarazúa Miguel & Singhal Saurabh & Gisselquist Rachel M., 2015. "Needs vs expediency: Poverty reduction and social development in post-conflict countries," WIDER Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    3. Roy, Sutanuka & Singh, Prakarsh, 2016. "Gender Bias in Education during Conflict: Evidence from Assam," IZA Discussion Papers 10092, Institute for the Study of Labor (IZA).
    4. Brück, Tilman & Naudé, Wim & Verwimp, Philip, 2013. "Entrepreneurship and Violent Conflict in Developing Countries," WIDER Working Paper Series 028, World Institute for Development Economic Research (UNU-WIDER).
    5. Francesco Amodio & Michele Di Maio, "undated". "Making Do with What You Have: Conflict, Firm Performance and Input Misallocation in Palestine," Development Working Papers 379, Centro Studi Luca d'Agliano, University of Milano.
    6. Prakarsh Singh & Sutanuka Roy, 2016. "Gender Bias in Education During Conflict Evidence from Assam," NCID Working Papers 09/2016, Navarra Center for International Development, University of Navarra.

    More about this item

    Keywords

    Terrorism; Rural Conflict; Violence; Investment; Agriculture; Farmers; Punjab;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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