How Do Firms Respond to Insecurity? Evidence from Afghan Phone Records
with Josh Blumenstock, Tarek Ghani, Ethank Kapstein, Thomas Scherer, and Ott Toomet
with Josh Blumenstock, Tarek Ghani, Ethank Kapstein, Thomas Scherer, and Ott Toomet
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Most Recent Version:
(February 2019) |
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Abstract:
We provide new evidence on how insecurity impedes economic development by linking data on violent events in Afghanistan to corporate mobile phone records. We first show that phone data can be used to measure private sector activity 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. Our effects are heterogeneous by firm size, suggesting that insecurity disproportionately impacts larger firms.
We provide new evidence on how insecurity impedes economic development by linking data on violent events in Afghanistan to corporate mobile phone records. We first show that phone data can be used to measure private sector activity 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. Our effects are heterogeneous by firm size, suggesting that insecurity disproportionately impacts larger firms.