How does forced displacement shape development in origin countries? We examine the case of Venezuela, where over seven million people have been forcibly displaced. Our study compares municipalities with different proportions of foreign-born populations before and after the international oil price shocks that accelerated forced displacement between 2014 and 2019. Our findings show that municipalities with higher foreign-born populations in 1990, exhibiting greater out-migration from Venezuela after 2014, experienced lower economic development and higher inequality. We shed light on a novel mechanism: forced displacement facilitates the perpetuation of autocratic leaders, further hindering development. It does so by weakening the opposition’s voices and facilitating the expansion of organized crime and illicit sources of income.
Authors
- Acknowledgements & Disclosure
- We are grateful to Roberto Mendoza and Gaspar Arias for excellent research assistant support and to Leah Boustan, José Morales-Arilla, Salvador Traettino, Maria Esther Caballero, Vincenzo DiMaro, Daniel Pereira, Carolina Mejía, Jose Luis Espinoza, Pablo Querubín, Margaret Peters, Daniel Ortega, Juan Vargas, Javier Romero, Carlos Rodríguez, Mark Thomas, and Dorothy Kronick for suggestions. We also thank participants at seminars at Oxford University, NOVA university, Bocconi University, the University of Turin, George Washington University, Villanova University, University of Pittsburg, John Hopkins University, the University of Chicago, and World Bank seminars for their feedback. Rozo acknowledges support from the Research Support Budget of the World Bank. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank, the governments they represent, or the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33131
- Pages
- 103
- Published in
- United States of America
Table of Contents
- Introduction 3
- Local Context: Venezuela's Unraveling 10
- Venezuela's Crisis, 2013-Present 11
- Forced Displacement and Colombian Networks 12
- Data 14
- Municipal Level Data 14
- Time-level Data 16
- Remote Sensing Data 17
- Electoral Data 20
- Additional Survey and Observational Data 24
- Empirical Design 25
- Validity of Imputed Outflows 27
- Development and Forced Displacement 28
- Who are the Venezuelans Leaving the Country? 32
- Remittances are Disproportionately Used for Subsistence Activities 37
- Forced Displacement and Human Capital Investments 37
- Are Governmental Actions Targeted to Municipalities with Large Foreign Shares? 38
- Forced Displacement and the Perpetuation of Autocratic Leaders 39
- The Obliteration of the Political Opposition 39
- The Expansion of Organized Crime and Illicit Economic Activities 43
- How Important are these Channels? 47
- Discussion 49
- Appendix 49
- Appendix 59
- Appendix A: Characterizing the Venezuelan Crisis 61
- Characterizing the Migrants Leaving Venezuela 66
- Appendix B: Data Sources and Variable Construction 67
- Satellite Data 67
- Night Light Density 67
- Spatial Inequality 70
- Type of Land Cover 71
- Deforestation 71
- Electoral Data 71
- Presidential elections 72
- Mayoral elections 72
- Manipulation test for the presidential elections 72
- Other municipal data sources 75
- Appendix C: Descriptive Statistics, Variables Employed in the Main Analysis 76
- Appendix D: Characterizing Foreign Settlements of 1990 77
- Appendix E: Robustness Tests 79
- Lower grid units 79
- Conley Standard Errors 80
- Cutoff 250 km 80
- Cutoff 150 km 82
- Cutoff 50 km 84
- Alternative Municipal Variation: Inverse Network and Linear Distance 85
- Inverse Network Distance 87
- Inverse Linear Distance 90
- Estimates ENCOVI, 2014-2021 92
- Electoral outcomes including 2024 presidential election 93
- Robustness to the Inclusion of Additional Control Variables 95
- Carnet de la Patria, Energy Blackouts, and Expropriation records 95
- Impacts on crime events share per 100,000 inhabitants 97
- The Role of Remittances 98
- Alternative DiD estimators 99
- Controlling by oil fields 99
- Electoral outcomes using electoral rolls 101
- Elasticity between Foreign share and PEP share 103
- Mediation Analysis 103
