Pakistan Institute of Development Economics



Violent Conflict and Informal Institutions: Evidence from a Civil Conflict in Pakistan (Article)

Conflicts have a variety of economic, social, and institutional consequences. In this study, we analyse the institutional legacies of violent conflicts by providing evidence from a civil conflict which occurred in the district Swat of Khyber-Pakhtunkhwa (KP), Pakistan. We consider three dimensions, i.e. Trust, Participation, and Cooperation, of informal institutions. District Buner—the neighboring district, is taken as the control district. A random sample of 500 households from each district is selected and Ordinary Least Squares (OLS) and Spatial Regression Discontinuity Design (SRDD) are employed for estimation. We find that exposure to violence undermines out-group trust and trust in governmental organisations; however, it promotes within-group trust and trust in Non-Governmental Organisations (NGOs). Likewise, conflicts stimulate participation in social organisations, political activities, and nongovernment structures but discourage participation in formal government structures. With regard to cooperation, conflicts have beneficial effects on within-group cooperation, collective problem solution, and cooperation with NGOs. However, they retard cooperation with formal government structures. The intensity of these effects is influenced by the location of the individuals as is shown by the results of SRDD. Alternatively, highly exposed areas exhibit comparatively higher changes in trust, participation, and cooperation as compared to the moderately and least affected areas.


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