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Conflict and the composition of economic activity in Afghanistan

IZA Journal of Development and Migration
Volume 12 (2021): Issue 1 (January 2021)
By:
Open Access
|Sep 2021

Figures & Tables

Figure 1

Conflict-related casualties and injured in Afghanistan. (A) Casualties and injured over time. (B) Casualties and injured across space.Source: Author's calculations based on UNAMA (2019) and GTD (2016). GTD, global terrorism database.
Conflict-related casualties and injured in Afghanistan. (A) Casualties and injured over time. (B) Casualties and injured across space.Source: Author's calculations based on UNAMA (2019) and GTD (2016). GTD, global terrorism database.

Figure 2

Economic activity in Afghanistan. (A) Firm registration by sector. (B) GDP growth rates by sector.Source: World Bank (2018). GDP, gross domestic product.
Economic activity in Afghanistan. (A) Firm registration by sector. (B) GDP growth rates by sector.Source: World Bank (2018). GDP, gross domestic product.

Figure 3

Response estimates of conflict on Economic Activity. (A) Conflict and nighttime light. (B) Conflict and active formal firms. (C) Conflict and land devoted to poppy cultivation.Note: Coefficients from regressing log (sum of lights per area), log (active formal firms per 1,000 inhabitants) and log (Poppy cultivation per 1,000 inhabitants) on lead and lags of conflict, controlling for district and time fixed effects, troops’ presence and aid. Coefficients for t−4 to t−1 come from regressions (A4–A6), while coefficients for t+1 to t+4 come from regressions (A1–A3). Coefficient t−1 refers to the lead (t+1) estimate. Conversely coefficient t+1 refers to the lag (t−1) estimate. Confidence intervals in whiskers are derived from district-clustered standard errors.
Response estimates of conflict on Economic Activity. (A) Conflict and nighttime light. (B) Conflict and active formal firms. (C) Conflict and land devoted to poppy cultivation.Note: Coefficients from regressing log (sum of lights per area), log (active formal firms per 1,000 inhabitants) and log (Poppy cultivation per 1,000 inhabitants) on lead and lags of conflict, controlling for district and time fixed effects, troops’ presence and aid. Coefficients for t−4 to t−1 come from regressions (A4–A6), while coefficients for t+1 to t+4 come from regressions (A1–A3). Coefficient t−1 refers to the lead (t+1) estimate. Conversely coefficient t+1 refers to the lag (t−1) estimate. Confidence intervals in whiskers are derived from district-clustered standard errors.

Figure 4

The impact of a surge in conflict on economic activity. (A) Temporary surge in conflict. (B) Permanent surge in conflict.
The impact of a surge in conflict on economic activity. (A) Temporary surge in conflict. (B) Permanent surge in conflict.

Conflict and nighttime light (placebo test)

log (sum of lights per area)
(1)(2)(3)(4)(5)
Conflicitt+1−0.000553 (0.00782)0.00363 (0.00638)0.00357 (0.00636)0.00365 (0.00639)0.00359 (0.00638)
Conflicitt+2−0.00941 (0.00774)−0.00527 (0.00738)−0.00538 (0.00739)−0.00514 (0.00739)−0.00525 (0.00740)
Conflicitt+3−0.00223 (0.00642)0.00213 (0.00572)0.00205 (0.00573)0.00224 (0.00571)0.00216 (0.00572)
Conflicitt+40.00366 (0.00638)0.00552 (0.00588)0.00544 (0.00587)0.00560 (0.00588)0.00553 (0.00587)
Troopst−1 0.0164*** (0.00392) 0.0164*** (0.00392)
  ISAFt−1 0.0172*** (0.00398) 0.0172*** (0.00397)
  ANAt−1 0.0573* (0.0345) 0.0594* (0.0345)
AIDt−1 1.19e–06 (9.56e–07)1.02e–06 (9.71e–07)
  Securityt−1 1.27e–05*** (4.85e–06)1.29e–05*** (4.79e–06)
  Other aidt−1 9.39e–07 (9.81e–07)7.54e–07 (9.97e–07)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations5,5725,5725,5725,5725,572
Adj. R20.9930.9940.9940.9940.994

Conflict and nighttime light

log (sum of lights per area)
(1)(2)(3)(4)(5)
Conflicitt−1−0.0110** (0.00488)−0.00833* (0.00499)−0.00825* (0.00499)−0.00826* (0.00500)−0.00821* (0.00496)
Conflicitt−2−0.0203*** (0.00659)−0.0173*** (0.00632)−0.0173*** (0.00632)−0.0172*** (0.00631)−0.0172*** (0.00631)
Conflicitt−3−0.0103 (0.00764)−0.00742 (0.00676)−0.00751 (0.00676)−0.00744 (0.00675)−0.00749 (0.00675)
Conflicitt−4−0.00835 (0.00792)−0.00836 (0.00713)−0.00837 (0.00712)−0.00838 (0.00712)−0.00839 (0.00710)
Troopst−1 0.0211*** (0.00455) 0.0212*** (0.00453)
  ISAFt−1 0.0217*** (0.00476) 0.0215*** (0.00473)
  ANAt−1 −0.00943 (0.0758) 0.00251 (0.0763)
AIDt−1 4.83e–07*** (1.85e–07)4.91e–07*** (1.84e–07)
  Securityt−1 1.12e–05** (4.81e–06)1.10e–05** (4.81e–06)
  Other aidt−1 4.40e–07** (1.85e–07)4.45e–07** (1.83e–07)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations5,9705,9705,9705,9705,970
Adj. R20.9940.9940.9940.9940.994

Conflict and active formal firms

log (active formal firms per 1,000 inhabitants)
(1)(2)(3)(4)(5)
Conflicitt−1−0.0512* (0.0271)−0.0488** (0.0247)−0.0490** (0.0247)−0.0489** (0.0246)−0.0492** (0.0246)
Conflicitt−2−0.0401 (0.0303)−0.0388 (0.0284)−0.0388 (0.0283)−0.0390 (0.0284)−0.0390 (0.0283)
Conflicitt−3−0.00931 (0.0250)−0.00819 (0.0243)−0.00792 (0.0242)−0.00852 (0.0243)−0.00819 (0.0242)
Conflicitt−4−0.0338 (0.0251)−0.0318 (0.0236)−0.0316 (0.0235)−0.0320 (0.0237)−0.0318 (0.0235)
Troopst−1 0.0264 (0.0264) 0.0264 (0.0264)
  ISAFt−1 0.0239 (0.0257) 0.0230 (0.0256)
  ANAt−1 0.172 (0.196) 0.224 (0.209)
AIDt−1 −1.42e–06** (6.70e–07)−1.42e–06** (6.72e–07)
  Securityt−1 1.83e–05*** (6.39e–06)2.09e–05*** (7.92e–06)
  Other aidt−1 −1.56e–06** (6.89e–07)−1.58e06** (6.90e–07)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations3,1593,1593,1593,1593,159
Adj. R20.8350.8360.8360.8360.836

Conflict and active formal firms (placebo test)

log (active formal firms per 1,000 inhabitants)
(1)(2)(3)(4)(5)
Conflicitt+1−0.00843 (0.0189)−0.00643 (0.0182)−0.00645 (0.0181)−0.00650 (0.0182)−0.00654 (0.0181)
Conflicitt+2−0.00230 (0.0200)−0.000640 (0.0215)−0.000756 (0.0215)−0.000623 (0.0216)−0.000808 (0.0215)
Conflicitt+3−0.0147 (0.0123)−0.0122 (0.0130)−0.0126 (0.0129)−0.0123 (0.0129)−0.0128 (0.0128)
Conflicitt+4−0.00947 (0.00771)−0.00736 (0.00869)−0.00757 (0.00861)−0.00736 (0.00874)−0.00769 (0.00864)
Troopst−1 0.0198 (0.0193) 0.0196 (0.0193)
  ISAFt−1 0.0181 (0.0189) 0.0169 (0.0189)
  ANAt−1 0.135 (0.168) 0.207 (0.192)
AIDt−1 −2.55e–07 (9.50e–07)−7.21e–08 (1.03e–06)
  Securityt−1 1.51e–05** (6.01e–06)1.92e–05** (8.79e–06)
  Other aidt−1 −8.04e–07 (9.84e–07)−6.43e–07 (1.02e–06)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations2,6732,6732,6732,6732,673
Adj. R20.8890.8890.8890.8890.889

Conflict and land devoted to poppy cultivation

log (Poppy cultivation per 1,000 inhabitants)
(1)(2)(3)(4)(5)
Conflicitt−10.00054 (0.0395)0.000385 (0.0395)0.0107 (0.0397)−0.00158 (0.0395)0.00817 (0.0398)
Conflicitt−20.0640* (0.0365)0.0613* (0.0365)0.0640* (0.0369)0.0603* (0.0365)0.0630* (0.0369)
Conflicitt−30.045 (0.0530)0.0429 (0.0528)0.053 (0.0525)0.045 (0.0526)0.0539 (0.0524)
Conflicitt−40.0674 (0.0614)0.0667 (0.0610)0.0626 (0.0593)0.0676 (0.0610)0.0637 (0.0595)
Troopst−1 −0.00704 (0.00910) −0.00729 (0.00903)
  ISAFt−1 0.0105 (0.0124) 0.00877
(0.0122)
  ANAt−1 −0.0478** (0.0186) −0.0444** (0.0187)
AIDt−1 −5.10e–06** (2.41e–06)−4.79e–06** (2.42e–06)
  Securityt−1 −0.000274*** (9.41e–05)−0.000233** (9.14e–05)
  Other aidt−1 −5.05e–06** (2.41e–06)−4.77e–06** (2.42e–06)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations3,5823,5823,5823,5823,582
Adj. R20.8350.8360.8360.8360.836

Summary statistics

VariableNMeanMinMaxStd. Dev.
Nighttime light (nanowatts)5,9700.680.0089.435.14
Active formal firms (per 1,000 inhabitants)3,1591.120.0118.711.68
Poppy cultivation (hectares per 1,000 inhabitants)3,5826.730.00416.527.20
Killings (per 1,000 inhabitants)5,9700.060.006.810.22
ISAF troops (per 1,000 inhabitants)6462.660.0038.735.46
ANA troops (per 1,000 inhabitants)6464.640.0019.325.50
Security-related aid (USD per quarter per 1,000 inhabitants)6461190.0016,555878
Other aid (USD per quarter per 1,000 inhabitants)64615,4920.00242,57327,538

Conflict and land devoted to poppy cultivation (placebo test)

log (Poppy cultivation per 1,000 inhabitants)
(1)(2)(3)(4)(5)
Conflicitt+1−0.0248 (0.0514)−0.0120 (0.0519)−0.0123 (0.0521)−0.0143 (0.0522)−0.0151 (0.0524)
Conflicitt+20.0140 (0.0305)0.0212 (0.0319)0.0212 (0.0319)0.0207 (0.0319)0.0207 (0.0319)
Conflicitt+3−0.0537 (0.0775)−0.0699 (0.0664)−0.0705 (0.0669)−0.0702 (0.0666)−0.0718 (0.0669)
Conflicitt+40.0668 (0.0551)0.0689 (0.0595)0.0687 (0.0595)0.0698 (0.0597)0.0695 (0.0599)
Troopst−1 −0.0250*** (0.00897) −0.0248*** (0.00893)
  ISAFt−1 −0.0264* (0.0136) −0.0287** (0.0132)
  ANAt−1 −0.0223 (0.0193) −0.0176 (0.0193)
AIDt−1 −1.58e–05** (6.61e–06)−1.58e–05** (6.63e–06)
  Securityt−1 −0.000682** (0.000275)−0.000704*** (0.000266)
  Other aidt−1 −1.56e–05** (6.59e–06)−1.58e–05** (6.59e–06)
District fixed effectsYesYesYesYesYes
Time fixed effectsYesYesYesYesYes
Observations3,1843,1843,1843,1843,184
Adj. R20.7780.8130.8130.8130.813
DOI: https://doi.org/10.2478/izajodm-2021-0010 | Journal eISSN: 2520-1786
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Language: English
Accepted on: Jul 8, 2021
Published on: Sep 7, 2021
Published by: Sciendo
In partnership with: Paradigm Publishing Services
Publication frequency: 1 times per year
Keywords:
Afghanistan,
conflict,
economic activity
Related subjects:
Business and economics,
Political economics,
Microeconomics,
Macroeconomics,
Economic policy,
Mathematics and statistics for economists,
Econometrics

© 2021 Virgilio Galdo, Gladys Lopez Acevedo, Martin Rama, published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 License.

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