Violent Conflicts and Economic Performance of the Manufacturing Sector in India
We investigate the effects of internal violent conflicts on the economic performance of manufacturing sector of Indian regional states. We examine the impacts of three different measures of violent conflicts on three different measures of economic performance of manufacturing sector. We conduct instrumental variable two-stage least squares estimation on a dataset for twenty-two Indian subnational states for the period from 1973 to 2004. We obtain the statistical evidence that the number of violent conflicts, the number of deaths and the number of participants in violent conflicts all have negative impacts on gross value added per worker and capital labor ratio of manufacturing sector, though they do not affect total factor productivity. Furthermore, we classify internal violent conflicts by background social cleavage, and by the nesting relationship among violent conflicts, and we find that ethnic and religious conflicts, as well as those nested in a large conflict have significantly negative impacts.
This paper is co-authored with Prof. Takahiro Sato, Research Institute for Economics & Business Administration, Kobe University.
Atsushi Kato is a Professor of the Graduate School of Asia Pacific Studies at Waseda University, Tokyo, Japan. He obtained Ph.D. (Economics) in 1996 at the University of Michigan, Ann Arbor. His research interest is political economy of economic development, and in particular, the effects of property right protection, corruption and competition on economic performance. He has published articles in Journal of Development Studies, Economics of Governance, Journal of Asian Economics, Energy Policy and others. He was a visiting scholar at the Institute of Economic Growth in India from 2004 to 2005.