Abstract

The purpose of this study is to measure the impact of the Syrian war on the development of the private industrial sector in the Syrian governorates. The study used the difference-in-differences methodology to compare changes in industrial production between the Syrian governorates that were exposed to the war and those that were not. The study developed the application of the difference-in-differences methodology from the least squares estimator to the dynamic least squares estimator. The DOLS estimator is characterized by its ability to deal with unstable, cross-sectionally correlated, heterogeneously varying data, and autocorrelation in time series variables. This estimator was applied to several analyses in the methodology related to trend effects, group effects, individual effects, and duration effects. The study found that the Syrian war had a significant negative impact on the development of the private industrial sector in Syrian governorates that were exposed to the war. Specifically, the study found that industrial production in Syrian governorates that were exposed to the war decreased by more than 50% from its pre-war level of development. These results are due to several reasons, including infrastructure destruction, as the war caused damage to industrial infrastructure, including factories and production lines, as well as disruption of supply chains due to economic sanctions. This study allows the application of the DOLS estimator within the difference-in-differences methodology to data from different sectors in Syria, provided that the data is available, allowing us to determine the standing-point (where are we now) by measuring and understanding the impacts of the war accurately on the development of vital sectors in the economy. The study also recommends the need to conduct a new survey of the private industrial sector in Syria, thus measuring the duration of the extension of the war’s impacts and filling the gap of previous years through the technique proposed in this study. The tool is important for inferring the multifaceted impacts of the war on Syria for policymakers and investors interested in the development of the private industrial sector in Syria.