
Political protests in the form of strikes, locally known as hartals, remain quite common in the Indian subcontinent countries. Such a form of protests is associated with a mass movement, intended to cause a total shutdown of economic activities and often results in coercion, violence, and damage to public and private properties. Utilizing the World Bank enterprise survey data of 2007 and 2013 of Bangladesh, this study examines the impacts of hartal on manufacturing firms. We find that political protests significantly increase the cost for firms. Using flexible cost function based on factor analysis we see the factor-neutral effect of strikes is positive and statistically significant, showing evidence of reduction of firm productivity due to hartals. However, we did not find any evidence for systematic factor re-optimization by firms -- in response to political strikes – suggesting that firms do not reallocate factor shares to tackle uncertain and irregular shocks like hartal.
D74 - Conflict ; Conflict Resolution ; Alliances ; Revolutions, O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology, D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity
D74 - Conflict ; Conflict Resolution ; Alliances ; Revolutions, O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology, D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity
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