Working Paper: CEPR ID: DP17895
Authors: Klaus Desmet; Joseph Flavian Gomes
Abstract: This paper shows that ethnically remote locations do not reap the full peace dividend from increased market access. Exploiting the staggered implementation of the US-initiated Africa Growth and Opportunity Act (AGOA) and using high-resolution data on ethnic composition and violent conflict for sub-Saharan Africa, our analysis finds that in the wake of improved trade access conflict declines less in locations that are ethnically remote from the rest of the country. We hypothesize that ethnic remoteness acts as a barrier that hampers participation in the global economy. Consistent with this hypothesis, satellite-based luminosity data show that the income gains from improved trade access are smaller in ethnically remote locations, and survey data indicate that ethnically more distant individuals do not benefit from the same positive income shocks when exposed to increased market access. These results underscore the importance of ethnic barriers when analyzing which locations and groups might be left behind by globalization.
Keywords: Trade Liberalization; Market Access; Conflict; Peace Dividend; Ethnic Remoteness; Sub-Saharan Africa
JEL Codes: D74; F13; F6; O12; O55; R11; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased trade access (F19) | Reduced conflict (D74) |
| Ethnic remoteness (J15) | Weakened effect of trade access on conflict (D74) |
| Ethnic remoteness (J15) | Diminished peace dividend from trade access (F69) |
| Trade access (F19) | Income gains (D31) |
| Ethnic remoteness (J15) | Smaller income gains from trade access (F61) |