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Night Lights and Economic Activity in Military Conflict Zones in Former USSR Countries

Student: Rufat Mustafaev

Supervisor: Konstantin Kholodilin

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Economics (Bachelor)

Year of Graduation: 2019

Measuring economic costs of war is vital from a social point of view as it allows to take a look at violent conflicts from a different angle and to anticipate and warn of the inevitable destructive consequences of such events. However, due to conflict-affected nations caring much more about surviving rather than gathering various types of statistics, cost of conflict estimations based on national accounts are unreliable. Nightlights intensity indicator is a valuable new tool for an unbiased economic activity measurement as it reflects most trends in economic activity and is available for any place and time. In this paper, we use nightlights data to assess the losses suffered by ex-USSR regions due to three military conflicts that happened during the last thirty years. Through fixed effects panel regression we estimate GRP per capita based on the nightlights indicator. By constructing synthetic control regions separately for every conflict-affected region and calculating difference-in-differences we find that Chechnya suffered a long-term economic depression until a complete rebound, South Ossetia experienced a very short-term downturn due to a short duration of the conflict, while Donetsk an Luhansk regions show no signs of positive trends suffering heavily since the conflict began.

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