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

  • Singh, Prakarsh

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33328.

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Date of creation: Mar 2011
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Handle: RePEc:pra:mprapa:33328
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