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Economic impact of political protests (strikes) on manufacturing firms : evidence from Bangladesh

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  • Shonchoy, Abu S.
  • Tsubota, Kenmei

Abstract

Political protests in the form of strikes, locally known as hartal, remain quite common in the Indian subcontinent countries. Such a form of protests is associated with mass movement, intended to cause a total shutdown of economic activities and often results in coercion, violence, and damage to both public and private properties. Utilizing the World Bank Enterprise survey data of 2007 and 2013 of Bangladesh, this study examines the impacts of hartals on manufacturing firms. We find that political protests significantly increase costs for firms. Using flexible cost function based on factor analysis we see that the factor-neutral effect of strikes is positive and statistically significant, showing evidence of a reduction in firm productivity due to hartals. However, we did not find any evidence for systematic factor re-optimization by firms – in response to political strikes – suggesting that firms do not reallocate factor shares to tackle uncertain and irregular shocks like hartals.

Suggested Citation

  • Shonchoy, Abu S. & Tsubota, Kenmei, 2015. "Economic impact of political protests (strikes) on manufacturing firms : evidence from Bangladesh," IDE Discussion Papers 523, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper523
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    Cited by:

    1. Ghosh, Saibal, 2023. "Social unrest and corporate behaviour during the Arab Spring period," The Journal of Economic Asymmetries, Elsevier, vol. 27(C).
    2. Atindra Dahal, 2020. "Re-defining Modernity and Development Dimension in Quest of Indigenous and Ingenuous Prosperity of Himalayan Region," Technium Social Sciences Journal, Technium Science, vol. 3(1), pages 11-25, February.
    3. Samer Matta & Michael Bleaney & Simon Appleton, 2022. "The economic impact of political instability and mass civil protest," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 253-270, March.
    4. Reshad N. Ahsan & Kazi Iqbal, 2020. "How does violence affect exporters? Evidence from political strikes in Bangladesh," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 599-625, August.
    5. Iqbal, Kazi & Tsubota, Kenmei & Shonchoy, Abu S & Hoque, Mainul, 2018. "Political instability and stock market returns : evidence from firm-level panel data of securities in Bangladesh," IDE Discussion Papers 712, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Samer Matta, 2017. "The Microeconomic Impact of Political Instability: Firm-Level Evidence from Tunisia," Working Papers 1135, Economic Research Forum, revised 09 Jul 2017.
    7. Carolina Laureti & Alain De Janvry & Elisabeth Sadoulet, 2017. "Flexible Microfinance Products for Financial Management by the Poor: Evidence from SafeSave," Working Papers CEB 17-036, ULB -- Universite Libre de Bruxelles.
    8. Reshad N. Ahsan & Kazi Iqbal, 2016. "How Do Exporters Cope With Violence? Evidence from Political Strikes in Bangladesh," Department of Economics - Working Papers Series 2025, The University of Melbourne.
    9. Iqbal, Kazi & Tsubota, Kenmei & Shonchoy, Abu S & Hoque, Mainul, 2018. "Distributional impact of political violence : evidence from differential impacts on commodity price," IDE Discussion Papers 711, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    Keywords

    D74 - Conflict; Conflict Resolution; Alliances; O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology; Productivity; Manufacturing industries; Mass movement; Political strikes; Translog cost function; Factor biased technology;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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