The impact of political violence on export flows: evidence from South Africa

Ujma, Christopher

The impact of political violence on export flows: evidence from South Africa

Thesis / Dissertation

2023

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

This paper examines the impact of the civil unrest episode that struck South Africa's KwaZulu Natal region in July 2021 on export flows. Using monthly transaction-level data and a difference-in-differences identification strategy, the study finds that the unrest period resulted in a significant decline in export values, originating primarily from a reduction in the extensive margin (number of distinct product varieties exported per origin-destination relationship). However, these results are found to mask heterogeneity in terms of the impact of this effect across products of varying levels of differentiation, with the total effect of the unrest episode on export values and the extensive margin found to only be significant for differentiated products during the crisis period. Exports of undifferentiated products, meanwhile, exhibited the largest negative effect on the intensive margin (the average value per product variety exported). These significant effects, however, were only present during the month of the unrest for both differentiated and undifferentiated products – suggesting that exporters in affected regions quickly re-entered those product-destination relationships that had been destroyed during the unrest episode; and that the strength of those relationships was not permanently affected by this period.

Keywords

Political violence

South Africa

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