Insecurity and Industrial Organization: Evidence from Afghanistan

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Conflict and the Composition of Economic Activity in Afghanistan

“…Like all three of them, the estimation relies on a temporal structure to capture dynamic effects, and it measures the intensity of conflict through the number of casualties associated with it. As in the studies on Afghanistan by Blumenstock et al (2018) and by Lind et al (2004), the geographic unit of observation is the district. And data are organized by quarters, keeping in mind that the planting season for poppies is between the months of November and December, or the fourth quarter in the calendar year.…”

“…Impacts on the formal sector are assessed by Blumenstock et al (2018), who investigate how private sector firms in Afghanistan respond to changes in the local security situation. Whether the firms are active is assessed based on call detail records from one of the country's largest mobile network operators between April 2013 and December 2016.…”

“…In South Asia, this high correlation holds even at the subnational level (Beyer et al 2018). It has also been documented that data from mobile phone records can be exploited to understand a large array of social phenomena from land use to wealth and asset distribution to traditional measures of firm activity (Pei et al 2014, Blumenstock et al 2015, Blumenstock et al 2018, among others. And the land surface devoted to poppy cultivation has already been used as a direct measure of the size of illicit activities (Lind et al 2014).…”

“…Berman et al (2013) find that construction permits decreased in number in the Philippines when rebel groups triggered an escalation of conflict. And Blumenstock et al (2018) report that mobile phone traffic by formal firms in Afghanistan fell when conflict-related casualties increased.…”

Trading with the Enemy: The Impact of Conflict on Trade in Non-Conflict Areas

“…Amodio and Di Maio (2017) show that Palestinian firms in violent areas substituted the domestically produced materials for the imported ones during the Second Intifada. Most recently, Blumenstock, Ghani, Herskowitz, Kapstein, Scherer, and Toomet (2018) use mobile phone metadata to study the reaction of firms to violence in Afghanistan. 10 Our work naturally complements the literature on ethnicity, culture, and trade.…”