How Does Violence Affect Exporters? Evidence from Political Strikes in Bangladesh

48 Pages Posted: 7 Nov 2016 Last revised: 29 Nov 2017

Reshad Ahsan

University of Melbourne

Kazi Iqbal

Bangladesh Institute of Development Studies (BIDS)

Date Written: November 29, 2017

Abstract

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

Ahsan, Reshad and Iqbal, Kazi, How Does Violence Affect Exporters? Evidence from Political Strikes in Bangladesh (November 29, 2017). Available at SSRN: https://ssrn.com/abstract=2865272 or http://dx.doi.org/10.2139/ssrn.2865272

Reshad Ahsan (Contact Author)

University of Melbourne ( email )

Melbourne, 3010
Australia

HOME PAGE: http://https://sites.google.com/site/reshadahsan/home

Kazi Iqbal

Bangladesh Institute of Development Studies (BIDS)

E-17, Agargao, Shere Bangla Nagar
Dhaka, 1207
Bangladesh

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