How Does Violence Affect Exporters? Evidence from Political Strikes in Bangladesh
48 Pages Posted: 7 Nov 2016 Last revised: 29 Nov 2017
Date Written: November 29, 2017
Using novel, high-frequency data on political strikes, we examine the impact of political violence on the export-oriented garments industry in Bangladesh. Our data cover the universe of political strikes and export transactions in Bangladesh during 2010 to 2013. Using an event-study approach, we find that there is a 16.26 percent reduction in the baseline probability of exporting on the day of a strike. Most of these shipments are reallocated to the day before the strike, while the remaining shipments are delayed by up to six days. We then use country- and product-level data to examine the broader implications of these disruptive effects. We show that countries with greater political violence tend to have a comparative disadvantage in higher-priced garments. This suggests that political violence can prevent a country from moving up the garments value chain.
Keywords: Exports, Political Violence, Garments
JEL Classification: F14, F50, D74
Suggested Citation: Suggested Citation