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Low-intensity Conflict and Firm Level Investment in Ethiopia

Author

Listed:
  • Dominik Noe

    (Courant Research Centre-PEG, University of Goettingen)

  • Admasu Shiferaw

    (Department of Economics, The College of William and Mary)

Abstract

This paper investigates the effect of low-intensity armed conflict on firm-level investment in a Sub-Saharan African country. We match firm level panel data from Ethiopian manufacturing with battle events at the town level. Using a more precise spatial identification of conflict exposure, we find that conflict reduces the investment rate significantly even when events are not extremely violent. The adverse investment effect increases with the geographic proximity of conflict and tends to decline with the capital intensity of production.

Suggested Citation

  • Dominik Noe & Admasu Shiferaw, 2013. "Low-intensity Conflict and Firm Level Investment in Ethiopia," Working Papers 141, Department of Economics, College of William and Mary, revised 05 Dec 2013.
    • Handle: RePEc:cwm:wpaper:141
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    File URL: http://economics.wm.edu/wp/cwm_wp141_rev1.pdf
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    References listed on IDEAS

    as
    1. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    2. Paul Collier & Anke Hoeffler, 2004. "Greed and grievance in civil war," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 563-595, October.
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    Cited by:

    1. Lance Kent & Toan Phan, 2013. "Business Cycles with Revolutions," Working Papers 145, Department of Economics, College of William and Mary.

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    More about this item

    Keywords

    Armed conflict; investment; firms; Ethiopia; GIS data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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