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Marriott Marquis, Presidio 1
Hosted By:
American Economic Association
We build a general equilibrium model where a subsistence-based autarkic hinterland coexists with sectoral specialization in an integrated segment, and there are two alternative routes to international market. A trade shock to one route affects resource allocation in both the routes by shifting two spatial margins: margin of market integration, and margin of sectoral specialization. The effects of temporary trade shock are heterogeneous w.r.t the pre-shock market access of a location along a route and can create persistent effects through built-up density (housing and manufacturing structures).
We use panel data in a fixed effect difference-in-difference set-up based on the evidence on covariate balance in the pre-crisis period. We estimate the location of two spatial margins along a route before and after the trade shock. The estimates show that shift in the margin of integration enlarged the autarkic hinterland in the Abidjan route, but contracted it in the alternate routes. The zone of manufacturing specialization became smaller in locations with better initial market access along the Abidjan route, but expanded in the alternate routes. Evidence from satellite data suggests that these reallocations led to persistent effects; built-up density in alternate routes increased at a rate more than twice that in the Abidjan route.
Economic Development in Africa
Paper Session
Sunday, Jan. 5, 2020 1:00 PM - 3:00 PM (PDT)
- Chair: Meredith Startz, Stanford University
Ethnically Asymmetric Political Representation and the Provision of Public Goods: Theory and Evidence from Ethiopia
Abstract
While the salience of ethnicity as a factor in ruling coalition formation in African governments has been documented in the literature, less is known about its impact on the development outcomes in these polities. We construct a simple political economy model in which investments in public goods in ethnic-based federations vary according to the degree of political representation that the various ethnic groups enjoy at the center. In particular, transfers from the central government favor a minority group’s region if political power is dominated by the group’s elites. We then exploit the natural experiment provided by the institution of an ethnic federalism in Ethiopia in 1995, to study the impact of ethnically asymmetric political representation on the provision of public goods. Using a Difference-in-Difference estimation strategy on repeated cross-sectional data, we find that access to public goods improved significantly faster in the politically-dominant Tigray ethnic region than in the other regional states of the country. We also find that the regional disparities in terms of access to public goods are more pronounced in rural areas than in urban areas.Improving Food Safety on the Farm: Experimental Evidence from Kenya on Agricultural Incentives and Subsidies as Public Health Investment
Abstract
Evidence continues to mount that foodborne illness imposes a staggering health burden in developing countries. However, standard approaches used by developed country governments to ensure food safety are not appropriate in settings where regulatory enforcement capacity is weak and most firms are small and informal. Thus, interventions to improve food safety in developing countries must take into account the constraints and incentives faced by producers in these countries. In this paper, we test the impact of two such interventions: subsidies for technologies that improve food safety and price premiums for safer produce. We examine the case of on-farm control of aflatoxin, a carcinogenic toxin linked to child stunting that is produced by a fungus commonly found on maize and groundnut. We show that compared to Kenyan farmers who produce maize only for their family’s own consumption, Kenyan farmers who produce maize for sale are less likely to undertake post-harvest practices that increase the unobservable quality of aflatoxin safety. Employing randomized discount vouchers, we find that willingness to pay for a new post-harvest technology to prevent aflatoxin contamination is significantly lower among market producers than subsistence farmers. However, we find that take-up of the technology among market producers increases when they have the opportunity to sell aflatoxin-safe maize at a premium a few months after harvest. Using take-up rates from the experiment, we model the impacts of public subsidies and market incentives for aflatoxin control. We find that subsidization of aflatoxin control technologies is a cost-effective strategy for reducing liver cancer and possibly also for reducing stunting in children. The most cost-effective technologies considered are widely adopted by both subsistence and market producers, implying little additional impact of a price premium on food safety.Temporary Trade Shocks, Reallocation, and Persistence in Developing Countries: Evidence from a Natural Experiment in West Africa
Abstract
In response to rising inequality following decades of trade liberalization, many countries are adopting trade restrictions. Can temporary trade restrictions have long-lasting effects on spatial distribution of employment and resource allocation? To analyze this, we exploit the civil war in Cote d’Ivoire that disrupted access to world market for two neighboring land-locked countries: Mali and Burkina Faso. The crisis in Cote d’Ivoire forced rerouting of trade from Abidjan route to alternate routes for 5 years: in Mali (Dakar/Accra) and in Burkina Faso (Accra/Lome/Cotonou).We build a general equilibrium model where a subsistence-based autarkic hinterland coexists with sectoral specialization in an integrated segment, and there are two alternative routes to international market. A trade shock to one route affects resource allocation in both the routes by shifting two spatial margins: margin of market integration, and margin of sectoral specialization. The effects of temporary trade shock are heterogeneous w.r.t the pre-shock market access of a location along a route and can create persistent effects through built-up density (housing and manufacturing structures).
We use panel data in a fixed effect difference-in-difference set-up based on the evidence on covariate balance in the pre-crisis period. We estimate the location of two spatial margins along a route before and after the trade shock. The estimates show that shift in the margin of integration enlarged the autarkic hinterland in the Abidjan route, but contracted it in the alternate routes. The zone of manufacturing specialization became smaller in locations with better initial market access along the Abidjan route, but expanded in the alternate routes. Evidence from satellite data suggests that these reallocations led to persistent effects; built-up density in alternate routes increased at a rate more than twice that in the Abidjan route.
When Student Incentives Don’t Work: Evidence from a Field Experiment in Malawi
Abstract
Financial Incentives have been often proposed to enhance students’ performance, but their impact is ambiguous. Merit-based scholarships that reward only top performers could be inefficient by crowding-out intrinsic motivation, and probably affect only a small subgroup of students at the margin whose performance is relatively close to the cutoff. Through a field experiment among 5th to 8th graders in Malawi, we study impacts of the Standard merit-based scholarship program along with a Relative scholarship program in which students were grouped by similar baseline scores, and scholarships were awarded to top performers at the final exam in each group. We find that the Standard scholarship program significantly decreased test scores and motivation to study, especially for those least likely to win the scholarship. By contrast, we find no evidence for test score impacts among those in the Relative scholarship program.JEL Classifications
- O5 - Economywide Country Studies