This paper positions itself among the very rare microeconomic analyses on the
consequences of civil war. Up to now, most analyses on this topic are based upon
household surveys. The originality of the present study is that it investigates for the first
time the likely predominant route by which civil conflict affects the economy, namely
through firms. The context of the study is Sierra Leone, a country that was ravaged by a
violent conflict from 1991 to 2002. The approach is to use geographical variations in the
intensity of conflict to estimate the impact of violence on firms, on which we have data
from the World Bank 2007 Employers Survey. The proposed theory is that during the
conflict, violence affects production through a form of technical regress and demand
through a reduction in income. The persistent post-conflict effects are yet less obvious…/