Essays in Development Economics

Manjeer, Utsav

doi:https://doi.org/10.21985/n2-jdpr-8a63

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Essays in Development Economics

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AbstractThis dissertation consists of three papers examining economic issues in developing countries. The first paper studies how export activity affects prices in domestic consumer markets. Using extensive, spatially disaggregated data from India’s rice markets and exploiting a natural experiment provided by India’s rice export restrictions during 2007-2011, I show that, following the imposition of export restrictions, Indian districts with higher exposure to export trade experienced a greater increase of about 5 to 6.5 percent in prices paid by consumers in local markets. I illustrate the presence of strong synergies between export activity and intra-national trade as the key driver of my results. When exports flow freely, these synergies lead to lower domestic trade costs, which then translate to lower prices for consumers in local markets. Consequently, when exports are restricted, domestic trade costs and prices increase most in those regions which benefited from the free flow of export activity. My findings underscore that large developing economies can promote export activity to mitigate intra-national trade barriers, reduce prices, improve product quality, and raise overall welfare for their predominantly poor domestic consumers. The second paper retains focus on India but turns to the topic of institutions and political selection. Here, I document the nuanced consequences of historical institutions on modern-day adverse political selection using variation in colonial land tenure systems during British rule in India. Focusing on “bad” politicians, I show that while criminal politicians are more likely to run for, and win, elections in areas where extractive landlords historically held property rights, corrupt politicians who amass disproportionately large financial gains in office, are more likely to be in areas where individual cultivators historically held property rights. My findings highlight that historical differences in local institutions within a region ruled in entirety by a single colonial power can lead to large contrasts in the long-run persistent impact of these institutions on contemporary political economy outcomes. The third paper focuses on sub-Saharan Africa and returns to the topic of agriculture. In joint work with Dean Karlan, Monica Lambon-Quayefio, and Chris Udry, we set up a randomized controlled trial to study the impact of digital credit on the investment choices and economic outcomes of smallholder farmers in Ghana. Building on the literature which highlights the availability of adequate financial markets as crucial to the successes of small scale farmers, we test whether credit processed through a digital platform can overcome credit constraints in agriculture. In our experiment, we randomly assign individual, creditworthy farmers in our sample to either receive a short-term loan or not, and examine the impact of these loans after the harvest season. At the time of writing this dissertation, our study is in the final stages of fieldwork. Our study aims to contribute to the recent policy-driven interest in whether and how digital finance technology can overcome barriers preventing wider financial inclusion, especially in agriculture.

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