Conflict and farm inputs investment : can social safety nets have any mitigation effect?

Abstract

ABSTRACT This paper examines the impact of armed conflict on the tendency and value of investments in farm inputs. We further investigate whether unconditional cash transfers could stimulate investments in inputs under the context of armed conflict. Using panel data collected in 2014 and 2016 in Mali, we combine the control function approach with the correlated random effect model to address the time-invariant unobserved heterogeneity in non-linear context and the endogeneity problem of conflict variable. We take advantage of the randomized rollout of a national cash transfer program to investigate if there is any differential impact on farm inputs. We find that conflict has a negative and statistically significant impact on the tendency to use and the value of investments on fertilizers, pesticides and machinery. Interestingly, we find a statistically insignificant impact of the cash transfers on farm input investments. From a policy perspective, productive capacities of households cannot be restored by the cash transfers. Rather, a recovery of markets’ operations through the re-establishment of security is a more effective policy measure to increase investments in farm inputs.