Firm exit and armed conflict in Colombia.
Abstract
This article uses two unique panel data sets to study the causal effect that armed conflict has over firm exit 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, the authors find that a one-standard deviation (SD) increase in the number of guerrilla and paramilitary attacks in a municipality increases the probability of plant exit in 5.5 percentage points or .28 SD. This effect is stronger for younger manufacturing plants, with a smaller number of workers and low levels of capital.
Citation
Camacho, A.; Rodriguez, C. Firm Exit and Armed Conflict in Colombia. Journal of Conflict Resolution (2013) 57 (1) 89-116. [DOI: 10.1177/0022002712464848]