Peaceful entry: Entrepreneurship dynamics during Colombia's peace agreement

Carolina Bernal, Mounu Prem, Juan F. Vargas, Mónica Ortiz

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

The end of internal conflict is often shaped by political uncertainty and threats of violence recurrence. This implies that the effects of conflict termination on economic activity and specifically entrepreneurship can go in either direction, and we know little about this relationship. Studying Colombia's recent peace agreement with the FARC guerrilla, and using a difference-in-differences empirical strategy, we document that dynamics of entrepreneurship in traditionally violent areas closely mapped the politics that surrounded the peace agreement. When the agreement was imminent after a 5-decade conflict and violence had plummeted, local investors from all economic sectors established new firms and created jobs. Instead, when the agreement was rejected in a referendum, the party that promoted this rejection raised to power, and violence re-escalated, the rate of firms’ creation rapidly reversed.

Original languageEnglish (US)
Article number103119
JournalJournal of Development Economics
Volume166
DOIs
StatePublished - Jan 2024

All Science Journal Classification (ASJC) codes

  • Development
  • Economics and Econometrics

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