Opium for the Masses? Conflict-Induced Narcotics Production in Afghanistan
Jo Thori Lind, Karl Ove Moene and Fredrik Willumsen
Photo: MIT Press Journals
The Review of Economics and Statistics 2014 96 (5) pp. 949 - 966.
To explain the rise in Afghan opium production, we explore how rising conflicts change the incentives of farmers. Conflicts make illegal opportunities more profitable as they increase the perceived lawlessness and destroy infrastructure crucial to alternative crops. Exploiting a unique data set, we show that Western hostile casualties, our proxy for conflict, have a strong impact on subsequent local opium production. Using the period after the planting season as a placebo test, we show that conflict has a strong effect before but no effect after planting, indicating causality.