The Synthetic Control Method (SCM) has become a widely used tool in both identifying and estimating the causal impact of policies, shocks, and interventions of interest on economic and social outcomes. The technique has become particularly popular in estimating the effect of these shocks on a single treated unit. As a transparent and data‐driven statistical technique, the goal of the SCM is to construct an artificial control group for the treated unit that has similar pretreatment characteristics but has not undergone the treatment itself thus developing a plausible counterfactual against which impacts resulting from structural changes can be evaluated as part of a historical investigation. The method works well when the control group balances pre‐intervention outcomes and auxiliary covariates as much as possible. In spite of its widespread adoption, the use of the SCM in comparative economic history has lagged behind other areas of economics. In this article, we critically review the properties of the SCM and discuss the necessary conditions for a plausible application of the technique to comparative economic history in support of research designed to answer some of the long‐running historical questions and demonstrate the potential to use SCM in comparative economic history studies by estimating the impact of the oil discovery in the 1920s on Venezuela's long‐term economic growth.
This study was funded and undertaken by Professor David Gilchrist, convener of the Not-forprofits UWA Research Team at the University of Western Australia. The Not-for-profits UWA Research Team is a multi-disciplinary academic group focusing on developing research outcomes that are intended to meet the needs of Australia's Not-for-profit and charitable organisations, policy makers, governments and commentators. These research outcomes are intended to be industry-ready-that is, they are tools and commentary that are based on high quality research while being focused on implementation and practical supports.
We examine the effect of sectarian politics in the presence of weak state capacity on long-term economic growth. To this end, we exploit the 1956 civil uprising between Maronite Christian and Sunni Muslim factions in Lebanon to estimate the impact of sectarian political tensions on long-term growth. To isolate the impact of the uprising, we use synthetic control estimator and match Lebanon’s pre-1956 growth and development trajectory with the rest of the world where such uprising did not occur, and estimate the counterfactual growth trajectory in the hypothetical absence of the sectarian conflict. Our evidence indicates large and pervasive negative growth effects of factionalism. Our estimates imply that Lebanon’s per capita income down to the present day is on average 57% lower than that of its pre-1956 synthetic control group without sectarian clashes, and does not seem to be driven by preexisting or subsequent trends and shocks. The negative long-term growth effect of sectarian conflict is robust to a battery of spatial and temporal placebo checks, choice of samples and is not sensitive to the composition of control groups.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.