Trade and Conflict in Myanmar: A Reverse China Shock

Abstract

I study the effect of trade in mining goods on conflict events in the border region of Myanmar. Using a shift-share measure, I disaggregate national exports to the township level. Imports from other low and middle-income countries are used to construct an instrumental variable to rule out reverse causality. I use a two-way fixed effects model for estimation. Export exposure to mining goods is associated with an increase in violent conflict. This increase predominantly affects townships inhabited by ethnic minorities. A placebo test confirms that the production of mining goods drives the effect. Night lights close to the mines are brighter in years with high export exposure, but surrounding areas do not seem to benefit.