How Do Firms Respond to Insecurity? Evidence from Afghan Phone Records
with Josh Blumenstock, Tarek Ghani, Ethan Kapstein, Thomas Scherer, and Ott Toomet
with Josh Blumenstock, Tarek Ghani, Ethan Kapstein, Thomas Scherer, and Ott Toomet
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Most Recent Version:
(June 2019) |
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Abstract:
We provide new evidence on how insecurity affects firm behavior by linking data on violent events in Afghanistan to corporate mobile phone records. We first show that phone data can be used to measure the activity of private firms and validate our approach with administrative and survey data for 2,300 firms in Afghanistan. Next, we find that major terrorist attacks reduce the presence of firms in targeted districts by 4-6%. The effect is driven both by an increase in the exit of existing firms following attacks and a decrease in the entry of new firms. We find evidence of regional spillovers whereby attacks in provincial capitals are followed by reductions in firm presence in surrounding rural districts. Our results are heterogeneous by firm size: larger firms are more likely to reduce their local presence following attacks while smaller firms are more likely to cease mobile phone activity entirely.
We provide new evidence on how insecurity affects firm behavior by linking data on violent events in Afghanistan to corporate mobile phone records. We first show that phone data can be used to measure the activity of private firms and validate our approach with administrative and survey data for 2,300 firms in Afghanistan. Next, we find that major terrorist attacks reduce the presence of firms in targeted districts by 4-6%. The effect is driven both by an increase in the exit of existing firms following attacks and a decrease in the entry of new firms. We find evidence of regional spillovers whereby attacks in provincial capitals are followed by reductions in firm presence in surrounding rural districts. Our results are heterogeneous by firm size: larger firms are more likely to reduce their local presence following attacks while smaller firms are more likely to cease mobile phone activity entirely.