Violence, Instability, and Trade: Evidence from Kenya’s Cut Flower Sector

Abstract

We examine the implications of the violence and instability following the 2007 Kenyan elections and how it affected cut flower trade between Kenya and the EU. Using the Rotterdam demand model, we find that the post-election violence had a negative impact on EU imports from Kenya equivalent to €33 million – which is significant given the importance of flowers to Kenya’s economy. Results show that even a short period of violence can have an effect on trade since instability in an exporting country causes importers to source from other countries perceived as less risky (persisting even when order is restored).