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Conflict and Firms’ Performance : A Global View

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  • Brancati,Emanuele
  • Di Maio,Michele
  • Roberta V. Gatti
  • Asif M Islam

Abstract

This study provides a global analysis of the effect of conflict exposure on firms’ performance, combining geolocalized longitudinal firm-level data and information on political violence events from 91 countries between 2006 and 2019. Higher conflict exposure does not affect firm profits, as it reduces both sales and total costs. Sales decline due to the conflict-induced reduction in the availability of production inputs and the increase in informal competition. Firms react to lower sales by reducing labor costs and expenditure on other production inputs. The effect of conflict is more detrimental for firms in countries with low-quality bureaucracy and that are initially at peace.

Suggested Citation

  • Brancati,Emanuele & Di Maio,Michele & Roberta V. Gatti & Asif M Islam, 2024. "Conflict and Firms’ Performance : A Global View," Policy Research Working Paper Series 10898, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10898
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