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Firm Exit and Armed Conflict in Colombia

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  • Adriana Camacho
  • Catherine Rodriguez

Abstract

This paper uses two unique panel data sets to study the causal effect that armed conflict has over entrepreneurial activity in Colombia. Using a fixed effect estimation methodology at the plant level and controlling for the possible endogeneity of armed conflict through the use of instrumental variables, we find that a one standard deviation in the number of guerrilla and paramilitary attacks in a municipality increases the probability of firm exit in 8.1 percentage points. This effect is stronger for smaller plants and has a differential impact with respect to firms' age.

Suggested Citation

  • Adriana Camacho & Catherine Rodriguez, 2010. "Firm Exit and Armed Conflict in Colombia," WIDER Working Paper Series wp-2010-094, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2010-094
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    File URL: https://www.wider.unu.edu/sites/default/files/wp2010-94.pdf
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