State-based armed conflict and entrepreneurship: empirical evidence

This chapter adds to the understanding of the relationship between state-based conflict and entrepreneurship. From a survey of the existing literature, we formulate two hypotheses: (1) state-based conflict has a negative association with productive and opportunity-motivated forms of entrepreneurship, and (2) state-based conflict has a positive association with unproductive and necessity-motivated forms of entrepreneurship. We test these hypotheses using several measures of state-based armed conflict and entrepreneurship and a range of estimators. Both descriptive and regression statistics support our hypotheses. We also found that countries that suffered state-based armed violence had more non-productive entrepreneurship, were more militarized, and were substantially poorer. Furthermore, productive entrepreneurship was found to recover fast in some post-conflict countries when the intensity of conflict decreases. Finally, the level of development matters for the impact of state-based conflict on entrepreneurship, including the ratio of female to male entrepreneurs.