Conict and Investment

Tim Besley, Hannes Mueller and Prakarsh Singh

Note Prepared for the IGC Workshop on Fragile States
St Annes College, Oxford (July 6th-7th, 2011)

1 Introduction
This note provides a framework and discussion of our knowledge about
the link between conict and investment. The impact of conict on
investment is bound to vary from place to place and time to time. Hence,
there is a need to have an approach which gives a clear sense of the
dierences across conicts and the type of investment. The idea of an
average conict is therefore unlikely to help us understand about the
heterogeneity. Also, since we do not know about the eects of conicts
that are yet to end and those that might yet occur, it would be useful to
have models that can be calibrated out of sample. This means having an
approach with theoretical foundations which expose the core parameters
of interest. These can then be used to explore counterfactuals.
It is a fairly well-established (and unsurprising) fact that output falls
after the outbreak of violence. Persistent eects of violence on output
are likely to come from the destruction of current assets and falls in in-
vestment which reduces future asset creation. Understanding the timing
and duration of economic responses to conict therefore has to have a
model of investment at its heart.
This note presents a few signposts towards such an approach to un-
derstanding the link between conict and investment. We begin from a
simple theoretical model and discuss in detail how assessments about the
duration of conict play a key role in understanding the investment re-
sponse in theory and practice. The model that we propose considers the
switch from conict to peace as a Markov Chain with parameters which
can be studied empirically. We will also discuss how micro and macro
facts can be matched beginning from an underlying theoretical model.
We illustrate our method at work using micro-data from Punjab.
The rest of this note is structured as follows. In the next section, we

1
discuss some of the background literature which is now quite extensive.
We then present our conceptual framework. Section four applies this
to data on investments by farmers in Punjab during a period of rural
conict and shows how persistence matters crucially to the investment
response. Section ve lays out the research agenda and the link to policy.

2 Background
There is now increasing evidence on the negative impact of violent con-
ict on output and growth. According to Cerra and Saxena (2008), the
start of a civil war is typically associated with an 18 percent output
contraction.1 This compares to an 8 percent drop which is typically
seen at the onset of a banking crisis. This validates the obvious point
that conict is material in the fate of an economy. A civil war with
an average 7-year duration is correlated with a 15 percent decline in
household income and a 30 percent increase in the incidence of absolute
poverty and a civil war of ve years appears to decrease annual growth
rate by 2 percent (Collier, 1999; Hoe- er and Reynal-Querol, 2003). Ter-
rorism also seems to have long-lasting economy-wide costs. Abadie and
Gardeazabal (2003) estimate a negative impact of around 10 percent on
GDP per capita between 1968-1997.2
Blomberg et al. (2004) compare consequences of terrorism with ex-
ternal or civil wars. On average, terrorisms negative eect on growth is
smaller and less persistent than that of external or civil wars.3 Terror-
ism is also associated with a redirection of economic activity away from
investment spending and towards government spending. In fact, the
channel through which output is reduced in Israel is that of a decline in
private investment during terrorism (Eckstein and Tsiddon, 2004; Field-
ing, 2003).
It appears that a decline in investment is the main channel through
which conict aects output and growth. So far, most research has
focused on using stock markets as a way to understand this link. Al-
though, prolonged exposure to terrorism does not seem to desensitize
stock and foreign exchange markets in Israel (Eldor and Melnick, 2004),
1
Cerra and Saxena (2008) analyze the impact of civil war but treat every civil
war year as a separate event. Mueller (2011) derives the number of 18 percent from
focusing on civil war starts which makes the number comparable to Banking crisis
starts analyzed in Cerra and Saxena.
2
They create a synthetic control for the Basque country that takes other regions
of Spain in a combination to generate the same pattern of growth before onset of
conict as the Basque country.
3
Several studies nd no long-run eect of bombings (as opposed to terrorism or
civil wars) on income levels in Vietnam, Japan and West Germany (Miguel and
Roland, 2005; Davis and Weinstein, 2002; Brakman, Garretsen and Schramm, 2004).

2
expectations may play a key role in determining the extent of decline
in investment and these expectations are likely to be dependent on the
region-specic history of violence.4 Besley and Mueller (2011) estimate
the impact of the peace process in Northern Ireland on house prices. Af-
ter establishing a negative correlation between killings and house prices,
the parameters of a Markov switching model with conict and peace as
latent states are estimated. The model then allows estimation of the size
of the peace dividend as captured in house price changes. The method-
ology applied by Zussman, Zussman and Nielson (2008) is a search for
breaking points in Israels stock market index. The largest breaks are
then matched with conict events and they nd a sharp drop of 22 per-
cent in market value resulting from the outbreak of violence (Intifada)
in 2000 and an increase of 25 percent in market value resulting from the
adoption of a major peace initiative in 2003.
Thus, one can use data on asset prices to estimate either costs of war
or peace dividends. However, extrapolating results from one conict to
another is not at all straightforward. At the very least, it requires some
kind of structural economic model. Below, we discuss how this can be
developed for the purposes of studying investment.
Although several studies have analyzed macroeconomic impacts of
conict, there are problems associated with causal identication.5 There
has been a surge in microeconomic studies of civil wars on human capi-
tal accumulation. There appear to be immediate adverse eects on ed-
ucational attainment post-conict in Rwanda and Peru (Akresh and de
Walque, 2009; Len, 2009).6 Negative eects of civil conict on health
outcomes have been found in Colombia, Burundi and Iraq (Camacho,
2008; Bundervoet et al., 2009; Guerrero-Serdn, 2009).7
However, there is very little evidence on investments by rms dur-
ing and after conict. Micro-level evidence not only allows us to get
cleaner estimates and explore heterogeneous eects empirically, but it
may crucially allow the estimation of a structural model linking con-
4
There may not necessarily be a decline in investment. Guidolin and La Ferrara
(2004) present a case of diamond-mining rms in Angola that show a loss in value
when the civil war comes to a sudden end in 2002.
5
Confounding biases include those of omitted variables (such as institutional ca-
pacity, political economy, geography and culture) as well as reverse causality from
investment to conict.
6
There are negative consequences of civil wars on educational attainment of
women in Tajikistan and Guatemala (Shemyakina, 2006; Chamarbagwal and Moran,
2011).
7
For identication, these studies use dierence-in-dierences methodology that
relies on the assumption that conict aected areas would have the same trend for
investment as peaceful areas if there was no conict. This may not necessarily hold
in practice.

3
ict and investment. Post-election violence in Kenya appears to reduce
export volumes of ower rms by 38 percent (Ksoll et al., 2010) by a
direct impact on worker attendance.8 Singh (2011) provides evidence
for a particular investment channel through which sustained terrorism
in rural areas may aect growth in developing countries. Micro-level
data from agricultural surveys during the period of terrorism in Punjab,
India shows that a major terrorist incident in a district in a year reduces
long-term xed investment by around 17 percent for an average farmer
but eects are muted for short-term investment. This results in a farmer
losing close to 4 percent of his income annually because of the insurgency
between 1981-1990 and there are heterogeneous eects by income and
location of farmer.
To sum up, the range of negative impacts on output and growth seem
to be driven by a decline in investment. The empirical estimates for the
decline in investment have been found through stock market reactions,
asset prices, years of schooling and health indicators. These estimates
are likely to dier by type of violence, geographical location, persistence
of conict and horizon of investment. We have a paucity of rm-level
data during or immediately post-conict that removes biases or sheds
light on mechanisms and there is no work that links these results in a
structural model to facilitate their comparison.

3 Conceptual Framework
We discuss this in two parts. First, we lay out a simple investment
model. Second, we introduce the Markov switching model.

3.1 A Model of Investment

The standard economic approach to investment can be modied to think
about how state fragility, and conict in particular, has a bearing on in-
vestment decisions. The key idea is that investment should weigh up
the costs and benets over the economic horizon of the investment. To
x ideas, consider a standard capital investment then the value of in-
vestment should be reected in the marginal product of capital over the
period of the project. That marginal product could be aected by con-
ict in a variety of ways and, in principle, one could study and model
these dierent channels. However, to keep things simple, imagine that
conict can be thought of in terms of an uncertain "transactions cost"
which reduces the value of investing. This cost could be due to disruption
in the supply chain, the destruction of assets and/or the di culties in
8
Deininger (2003) nds that civil strife, in contrast to theft, reduces investment
and non-agricultural enterprise startups in Uganda.

4
hiring labor. This approach could also include intensication of corrup-
tion or diversion of resources into military spending. It is not important
to be specic. We measure this in proportion to the value of output like
we would with a proportional tax.
So write:
marginal value of investing = (1 transaction cost) (1)
marginal value product of capital.
A rational investor will not typically know the disruption that he/she
will face and hence must form expectations about this given the his-
tory of conict. So being able to say something about the impact of
violence/conict on investment requires an underlying model of expec-
tations formation something we will look at in the next section.
The investor will invest to a point where the marginal cost and the
expected benet of investment are equal, i.e.
E(marginal value of investing) marginal cost. (2)
The reason for the inequality is to encompass the possibility that invest-
ment may not be worthwhile at all.
If we insert equation (1) in the inequality in (2) it immediately follows
that the expected development of transaction costs due to violence will
aect investments. In principle, this framework can apply to any kind
of investment decision in either physical or human capital. The time
horizon may vary in each case and whether investment decisions are
reversible will also have a bearing on the value of investing. Given this
observation, we would expect investment decisions based on this kind of
simple calculation to vary by type of investment.
To make this kind of theory operational requires a number of compo-
nents some knowledge of technological knowledge of costs and benets
and a measure of the way that dierent kinds of conict aect transac-
tions costs. The challenge lies in being able to measure this (typically in
micro) data to build a model where the eects of policy interventions can
be calibrated. The dynamics of investment will come in particular from
changing expectations about the outlook for violence and the disruption
that it brings.

3.2 Conict Persistence

Investments are actions taken for a future benet and therefore critically
depend on expectations. An analysis of the impact of violence on invest-
ments has to rely on a model of how present violence maps into future
violence. In particular, the persistence of peace and conict will inu-
ence how economic actors react to events like the outbreak of violence

5
or cease-re agreements. A given outbreak of violence, for example, will
have a much stronger impact on investments if violence is regarded as
persistent than if the outbreak is regarded as a one-o event. One sim-
ple way to model the role of persistence for investment is to assume that
violence in a region follows a so-called Markov Chain.
A Markov Chain in its simplest form is a statistical process that
describes the switching back and forth between two "states". In the
application to conict these two states can be thought of as conict and
peace, each associated with a dierent level of violence. The Markov
Chain model delivers a very simple description of persistence because
it is completely described by two probabilities - the likelihood that a
period of peace is followed by another period of peace and the likelihood
that a period of conict is followed by another period of conict.
Tables 1 and 2 illustrate the dierence between a persistent and a
non-persistent Markov Chain process with two examples. The tables
show the probabilities of peace and conict in year t + 1 conditional on
the state in year t. Table 1 describes a relatively persistent violence
process. The probability that conict this year is followed by conict
next year is 80 percent whereas the probability that peace is followed
by peace is 90 percent. This contrasts with the second example in table
2 in which conict follows conict with a likelihood of only 55 percent
and peace follows peace in only 51 percent of the cases.

Table 1: Persistent Violence Process

conict in year t peace in year t
conict in year t + 1 80% 10%
peace in year t + 1 20% 90%

Table 2: Non-persistent Violence Process

conict in year t peace in year t
conict in year t + 1 55% 49%
peace in year t + 1 45% 51%

The role of persistence in shaping expectations is easily shown. As-

sume, for instance, that in each of the two examples investors observe
a transition from conict to peace. In the persistent process economic
agents will adjust their expectations on future violence drastically if they
see that violence is fading. The bottom row in table 1 shows that the
likelihood of peace tomorrow rises from 20 percent to 90 percent if the
present state changes from conict to peace. In the second example
economic agents only marginally adjust their expectations. The bottom
row of table 2 shows that the probability of peace tomorrow rises from

6
45 percent to 51 percent with a change from conict to peace. Clearly,
persistence makes a signicant dierence for how expectations change
with a transition from conict to peace.
The Markov Chain model can be applied to both time series of vi-
olence and pre-existing codings of conict and peace. To illustrate the
application we rst apply the process to the existing codings of civil war
available in the Correlates of War dataset provided in Sarkees (2000).
Table 3 shows data for two countries, Zimbabwe and Nigeria, for the
period 1960 to 1997. In the sample period both Nigeria and Zimbabwe
suered a similar number of years in civil war according to the corre-
lates of war coding. But the pattern of war and peace is very dierent.
Whereas Nigeria dips in and out of civil war several times, Zimbabwe
suered one continuous eight-year period of civil war. As can be seen at
the bottom of table 3 this dierence in conict character is captured by
dierences in persistence calculated in the Markov Chain model.9 Nige-
ria clearly features less persistence of peace (despite having less civil war
years) due to renewed outbreaks of civil war in the 1980s. The per-
sistence of civil war, on the other hand, is much higher in Zimbabwe
because of its continuous civil war episode in the 1970s. This dierence
is disregarded by studies that treat the civil war data as a collection of
independent 0/1 indicators without looking at the connection of these
indicators across time.
Hence, the Markov Chain model oers a simple way to categorize
conicts regarding their persistence of war and peace. We show next
why modelling persistence in this way is useful for the analysis of the
impact of conict on investments.10

4 Conict Persistence and Investment

We use the example of a violent conict in the state of Punjab in India
during the 1980s to illustrate how measures of persistence can help us
9
The calculations are simple. For example, the likelihood that peace persists in
Nigeria is calculated by dividing the number of transitions from peace to peace by
the total number of peace years, 28=31 90%:
10
Some caveats to the methodology are worth mentioning. First, Markov Chain
estimates can depend on what period one looks at. In Northern Ireland this did not
seem too much of a problem - results were similar when we ran the EM algorithm
over the whole period of violence. But, in general this could be an issue. Second,
changes in probabilities are not in the model. For instance, we cannot capture peace
that is perceived as more and more persistent. In principle, we could look at this
by re-estimating the Markov chain parameters. Third, an asymmetry between cost
at start and benet at the end of conict is not captured by the Markov Chain
method. Given the cross-country evidence in Cerra and Saxena (2008) this might be
unrealistic. The loss at the beginning might be bigger than the gain at the end.

7
Table 3: Illustration of Persistence Calculations with Correlates of War Data

Zimbabwe Nigeria
1960 0 0
1961 0 0
1962 0 0
1963 0 0
1964 0 0
1965 0 0
1966 0 0
1967 0 1
1968 0 1
1969 0 1
1970 0 1
1971 0 0
1972 1 0
1973 1 0
1974 1 0
1975 1 0
1976 1 0
1977 1 0
1978 1 0
1979 1 0
1980 0 1
1981 0 1
1982 0 0
1983 0 0
1984 0 1
1985 0 0
1986 0 0
1987 0 0
1988 0 0
1989 0 0
1990 0 0
1991 0 0
1992 0 0
1993 0 0
1994 0 0
1995 0 0
1996 0 0
1997 0 0
Prob(conflict follows conflict): 88% 57%
Prob(peace follows peace): 97% 90%

Source: Correlates of War Intra-State War Data, 18161997

understand the reaction of investments to violence. The rural insurgency
which started as a separatist movement in 1981 haunted the region until
1993 claiming more than 20,000 lives. The militant groups employed ter-
rorism against civilians in order to try and achieve political gains.11 We
use data on major terrorist killings at the district level as our measure
of conict and match a Markov Chain to each violence process. Figure 1
displays both the number of deaths due to terror attacks in the Amrit-
sar district and the estimated number of deaths derived after matching
the Markov Chain process to the raw data using the EM-algorithm by
Hamilton (1990).12 The gure illustrates that as soon as violence breaks
out the algorithm estimates the district to be in conict and once vio-
lence stops in 1993 the district is estimated to be in peace.

As explained above, the Markov Chain model relies on two persis-

tence probabilities to describe conict episodes. The estimates for Am-
ritsar are summarized in table 4. As can be seen in the table both peace
and conict were highly persistent in the district. Conict years followed
conict years with a likelihood of 88 percent while peace followed peace
with a likelihood of 94 percent. These estimates of persistence can be
11
Punjab was classied by UCDP as a state undergoing civil war between 1983-
1993. Also, there was a sharp decline in the agricultural growth rate from 6% to 2%
between 1987-1992. See Singh (2011) for a description of the conict and data.
12
As opposed to the correlates of war data, here, we do not use pre-dened states.
The algorithm estimates the probabilities of being in conict or peace jointly with the
state-dependent parameters of the model. For a description, see Besley and Mueller
(2011).

8
combined with the information displayed in gure 1 to derive the ex-
pected value of violence at each point in time. Put simply, the expected
value of violence is a combination of the level violence in a given year
with the estimate of how persistent this violence is. The more persistent
the conict, the stronger do changes in violence in a given year aect
expectations about the future level of violence.13

Table 4: Terror in Amritsar

conict in year t peace in year t

conict in year t + 1 88% 6%
peace in year t + 1 12% 94%
In order to illustrate how persistence aects investments we com-
bine the derived expected violence with actual investment data from the
Punjab region. More precisely, we regress information on investments
in tube-wells by farmers in Punjab from 1978 to 1990 on our expected
violence estimates.14 An application of these regression results to Am-
ritsar indicates that farmers in the district decreased their investments
by 448 rupees on average when violence started. This is quite a large
eect given that the mean and standard deviation of investments were
1086 and 733 rupees respectively, i.e. the outbreak of the conict led to
a fall in investment of around 40 percent.
Figure 2 highlights the role of persistence for this estimate of the
investment contraction. The graph shows the estimated reaction of in-
vestments at dierent levels of persistence holding all other parameters
xed. The vertical axis measures the extent to which farmers had re-
duced their investments if conict had been regarded as more or less
persistent than 88 percent. As can be seen, investment is aected quite
strongly by the level of persistence. In particular, if farmers had be-
lieved that conict would persist with only 30 percent they would have
decreased their investments by only 130 rupees on average. If farmers
had regarded conict as certainly persisting, investments would have
declined by more than 900 rupees.

It should be noted that most other districts in the Punjab region

had much less persistent conict episodes with a persistence of conict
13
An assumption behind this methodology is that the Markov Chain parameters
are used "as if" economic agents knew them. This assumption is justied if local
investors have a notion of how long conict and peace will last, i.e. if they observe
the level of tensions and conict potential on the ground.
14
In our regression we control for time and district xed eects. In addition, the
results are robust to a set of farm level covariates and district-specic time trends.

9
between 30 and 60 percent. Not surprisingly, our estimates of damage
to investments is much lower for these districts. The Markov Chain
persistence estimates therefore adds a way to describe heterogeneity of
violence in the dierent districts which cannot be captured otherwise.

5 Discussion and Directions for Future Research

The approach suggested here provides a portable framework for think-
ing about investment and conict in a wide variety of situations. It also
provides a way forward for the research agenda. One of the main advan-
tages of the structure lies in giving a sense of the timing of investment
returns to establishing peace. If this structure is matched with a better
understanding of conict dynamics and the evolution of expectations it
will lead to a much more realistic estimate of the economic reactions to
conict.
A key aspect of the approach is the way that it permits us to think
about persistence in establishing peace. It is hard to assess whether eco-
nomic actors have faith in the eorts into pacication (that have been)
via military intervention or otherwise to convince investors to commit.
Whether investorsexpectations are well modeled by a Markov Chain is
moot. And, to date, there has been little work directly surveying ex-
pectations about conict persistence. One direction for future research
eorts is to engage in more survey work on expectation formation. This
would create scope to examine how objective measures based on data on
violence agree or disagree with more subjective indicators.
Perhaps the biggest issue which lies some distance away is trying

10
to study how conict and investment interact when investment itself
provides a stake in peace. This is particularly interesting in the context
of decisions to invest in xed assets such as housing and land. Increases
in the value of such assets provides a tangible stake in the maintenance of
peace. There may even therefore be a case for policy to encourage such
investments if the externality associated with the maintenance of peace
is not being internalized by investors. For an approach along these lines
to be convincing empirically it would be necessary to have an approach
where there is a feedback loop from investment to future violence. This
could be specied and calibrated as part of the model. Such an approach
should be useful in planning strategies for economic recovery in fragile
states and being realistic about the timing of recovery.
The approach taken so far has not considered the complementarities
between dierent kinds of investments which could also be important.
An obvious example is the importance of reinforcing public and private
investments. However, public investment is likely only to be eective in
promoting private investment when there is reasonable optimism about
the continuation of peace. The model above could be used to simulate
the eect of investments with dierent return structures as a function of
violence persistence and hence could be used as a tool in policy analysis.
Although the literature on conict on investment is growing, we are
still a good way short of understanding all the issues. We view an essen-
tial feature of the next phase of work to provide a stronger link between
theory and empirics. Such approaches have a better prospect at doing
justice to the heterogeneity in country experiences and in predicting out
of sample. From a data collection point of view, the main dividends
are likely to come from having more micro-data before and after the on-
set of conict. But since conict may itself disrupt the process of data
collection, this is often demanding.

11
References
[1] Abadie, A. and J. Gardeazabal (2003) The Economic Costs of Con-
ict: A Case-Control Study for the Basque Country. American Eco-
nomic Review, 93(1), 113-133.
[2] Akresh, R. and D. de Walque (2010) Armed Conict and Schooling:
Evidence from the 1994 Rwandan Genocide. World Bank Policy
Research Paper, 4606.
[3] Besley, T. and H. Mueller (2011) Estimating the Peace Dividend:
The Impact of Violence on House Prices in Northern Ireland. Amer-
ican Economic Review (forthcoming).
[4] Blomberg, S., G. Hess and A. Orphanides (2004) The macroeco-
nomic consequences of terrorism. Journal of Monetary Economics,
51, 1007-1032.
[5] Brakman, S., H. Garretsen and M. Schramm (2004) The Strategic
Bombing of German Cities During World War II and Its Impact on
City Growth. Journal of Economic Geography, 4(2), 20118.
[6] Bundervoet, T., P. Verwimp and R. Akresh (2009) Health and Civil
War in Rural Burundi. Journal of Human Resources, 44, 2.
[7] Busse, M. and C. Hefeker (2007) Political risk, institutions and
foreign direct investment. European Journal of Political Economy
23, 397415.
[8] Camacho, A. (2008) Stress and Birth Weight: Evidence from Ter-
rorist Attacks. American Economic Review, 98(2), 511-15.
[9] Cerra, V. and S. Saxena (2008) Growth Dynamics: The Myth of
Economic Recovery. American Economic Review, 98(1), 43957.
[10] Chamarbagwala, R. and H. Morn (2011) The human capital con-
sequences of civil war: Evidence from Guatemala. Journal of De-
velopment Economics 94(1), 41-61.
[11] Collier, P. (1999) On the Economic Consequences of Civil War.
Oxford Economic Papers, 51, 168-183.
[12] Coyne, C., G. Dempster and J. Isaacs (2010) Asset Values and the
Sustainability of Peace Prospects. The Quarterly Review of Eco-
nomics and Finance, 50(2), 146-156.
[13] Davis, D. and D. Weinstein (2002) Bones, Bombs, and Break Points:
The Geography of Economic Activity. American Economic Review,
92(5), 126989.
[14] Deininger, K. (2003) Causes and Consequences of Civil Strife:
Micro-level Evidence from Uganda. Oxford Economic Papers, 55,
579-606.
[15] Eckstein, Z. and D. Tsiddon (2004) Macroeconomic consequences
of terror: theory and the case of Israel. Journal of Monetary Eco-
nomics, 51(5), 971-1002.

12
[16] Eldor, R. and R. Melnick (2004) Financial markets and terrorism.
European Journal of Political Economy, 20(2), 367-386.
[17] Fielding, D. (2003) Modelling Political Instability and Economic
Performance: Israeli Investment during the Intifada. Economica,
70 (277), 159-186.
[18] Guerrero-Serdn, G. (2009) The Eects of the War in Iraq on Nu-
trition and Health: An Analysis Using Anthropometric Outcomes
of Children. Royal Holloway mimeo 09/01.
[19] Guidolin, M. and E. La Ferrara (2007) Diamonds Are Forever, Wars
Are Not: Is Conict Bad for Private Firms? American Economic
Review, 97(5), 1978-1993.
[20] Guidolin, M. and E. La Ferrara (2005) The Economic Eects of
Violent Conict: Evidence from Asset Market Reactions. Federal
Reserve Bank of St. Louis Working Papers, 2005-066.
[21] Hamilton, J. D. (1989) A New Approach to the Economic Analysis
of Nonstationary Time Series and the Business Cycle. Economet-
rica, 57, 357-384.
[22] Hoe- er, A. and M. Reynal-Querol (2003) Measuring the costs of
conict. Oxford Working Paper.
[23] Ksoll, C., R. Macchiavello and A. Morjaria (2010) The Eect of
Ethnic Violence on an Export- Oriented Industry. CEPR Discussion
Papers, 8074.
[24] Len, G. (2010) Civil Conzict and Human Capital Accumulation:
The Long Term Eects of Political Violence in Peru. BREAD Work-
ing Paper, 245.
[25] Miguel, E. and G. Roland (2010) The Long Run Impact of Bombing
Vietnam. Unpublished manuscript, Univ. of California, Berkeley.
[26] Mueller, H. (2011) Growth Dynamics: The Myth of Economic Re-
covery - Comment. IAE mimeo.
[27] Sarkees, M. R. (2000) The Correlates of War Data on War: An
Update to 1997. Conict Management and Peace Science, 18(1),
12344.
[28] Shemyakina, O. (2006) The Eect of Armed Conict on Accumula-
tion of Schooling: Results from Tajikistan. Journal of Development
Economics (forthcoming).
[29] Singh, P. (2011) Impact of Terrorism on Investment Decisions of
Farmers: Evidence from the Punjab Insurgency. LSE mimeo.
[30] Zussman, A., N. Zussman and M. Orregaard Nielsen (2008) Asset
Market Perspectives on the Israeli-Palestinian Conict. Economica,
75, 84-115.

13