How Production Firms Adapt to War

From its inception, development economics has revered the industrialization process. Economists from Smith to Rostow to Gershenkron to Lewis have emphasized the importance of industrial factories as crucibles in which the division of labor is refined, a labor force is developed, and technical knowledge is generated and shared. And though the poorest countries with weak industrial sectors are also the ones that tend to fall prey to the so-called “conflict trap,” very little research on economies in conflict has explored how production firms operate. They focus instead on those types of “contested sectors” like the extractive industries that can drive and prolong violent conflict – examples include Fearon (2005), Humphreys (2005) and Le Billon (2001). Furthermore, research on the private sector in conflict has emphasized the vulnerability of capital concentrations and the trade routes that link them – Collier (1999), for instance, asserts that capitaland trade-intensive sectors (notably including industrial production and manufacturing) are “war-vulnerable,” while sectors like agriculture are not. A growing body of conflict research seems ready to strike from the agenda study of firm-level economic actors typically characterized by concentrated capital, labor and trade requirements. Rather, it seeks to understand the role of “entrepreneurs” in conflict – a term used alternately for those who innovate in the private sector and those who simply start small, replicative businesses, but regardless one which connotes economic activity carried out by atomistic individuals, and not by larger coordinated firms.