Civil Conflict and Firm Performance
This paper explores the development of Cote d'Ivoire's formal private sector in the years preceding and immediately following the political crises in 1999-2000 and the civil war that began in 2002. Notably, during the conflict politicians exploited and exacerbated anti-foreigner sentiments, tolerating increasing number of attacks targeting foreigners. We use a unique database from the Registrar of Companies that includes information on all formal firms, including annual financial data and the nationality of shareholders and employees. We show that in aggregate, the formal sector experienced increased exit, decreased entry and negative net employment growth, while both aggregate and firm-level total factor productivity declined sharply starting in 2000. Furthermore, we find evidence that the productivity of foreign firms -defined as firms owned by and/or employing foreigners - dropped significantly more than the productivity of Ivorian counterparts in 2003, controlling for other firm characteristics, such as size, sector, and age. We also find that foreign firms were affected more by increases in conflict intensity.
Klapper, L.; Richmond, C.; Tran, T. Civil Conflict and Firm Performance. USA (2012) 39 pp.