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Opium for the Masses? Conflict-Induced Narcotics Production in AfghanistanJo LindUniversity of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Karl O. MoeneUniversity of Oslo - Department of Economics Fredrik WillumsenUniversity of Oslo - Department of Economics February 20, 2009 Univ. of Oslo, Dept. of Economics Memorandum No. 05/2009 Abstract: We show that the recent rise in Afghan opium production is caused by violent conflicts. Violence destroys roads and irrigation, crucial to alternative crops, and weakens local incentives to rebuild infrastructure and enforce law and order. Exploiting a unique data set, we show that Western hostile casualties, our proxy for conflict, have strong impact on subsequent local opium production. This proxy is shown to be exogenous to opium. We exploit the discontinuity at the end of the planting season: Conflicts have strong effects before and no effect after planting, assuring causality. Effects are strongest where government law enforcement is weak.
Number of Pages in PDF File: 41 Keywords: Conflict, narcotics production, resource curse, Afghanistan JEL Classification: D74, H56, K42, O1 working papers seriesDate posted: March 17, 2009Suggested CitationContact Information
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