Essays on Macroeconomic Aspects of Economic Development

Manysheva, Kristina

doi:https://doi.org/10.21985/n2-4dcj-w558

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Essays on Macroeconomic Aspects of Economic Development

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The three essays composing this dissertation are unified by their focus on the macroeconomic aspects of economic development. In Chapter one titled "Land Property Rights, Financial Frictions, and Resource Allocation in Developing Countries'', I study the effects of weak land property rights and limited access to finance on aggregate productivity and the allocation of resources, as well as the role of their interaction. To do that, I develop a dynamic general equilibrium model and use it to quantify the aggregate and distributional impacts of land and financial market imperfections connected via the collateral channel. I discipline the model with longitudinal micro data from Tanzania and show that substantial frictions in land and financial markets affect resource allocation and economic efficiency in agriculture. In the model, these distortions reduce aggregate productivity by allocating land and capital to less efficient producers, and by preventing households from moving out of agriculture and limiting entrepreneurship. An economy-wide land reform that improves land property rights leads to increases in agricultural and non-agricultural output by 7.4% and 8.2%, respectively, as well as a decline in agricultural employment by 8.6%. A land reform also results in higher financial inclusion, especially among the poorest, as land market frictions amplify the effects of financial markets imperfections. While a financial reform can deliver comparable aggregate effects, land reform is more pro-poor and reduces consumption inequality. In Chapter two, which is a joint work with Enrico Berkes and Martí Mestieri titled "Global Innovation Spillovers and Productivity: Evidence from 100 Years of World Patent Data'', we use a panel of historical patent data covering a large range of countries over the past century to study the evolution of innovation across time and space and its effect on productivity. We document a substantial rise of international knowledge spillovers as measured by patent citations since the 1990s. This rise is mostly accounted for by an increase in citations to US and Japanese patents in fields of knowledge related to computation, information processing, and medicine. We estimate the causal effect of innovation induced by international spillovers on sectoral output per worker and total factor productivity (TFP) growth in a panel of country-sectors from 2000 to 2014, as well as on aggregate income per capita since 1960. To assess causality, we develop a shift-share instrument that leverages pre-existing citation linkages across countries and fields of knowledge, as well as heterogeneous countries' exposure to technology waves. On average, an increase of one standard deviation in log-patenting activity increases sectoral output per worker growth by 1.1 percentage points. We find results of similar magnitude for sectoral TFP growth and long-run aggregate income per capita growth. In Chapter three, which is a joint effort with Titan Alon, Matthias Doepke, and Michèle Tertilt titled "Gendered Impacts of Covid-19 in Developing Countries'' we examine whether the fact that in many high-income economies, the recession caused by the Covid-19 pandemic has resulted in unprecedented declines in women's employment, took place in developing countries. We focus our study on Nigeria, the most populous country in Africa. A force affecting high- and low-income countries alike are increased childcare needs during school closures; in Nigeria, mothers of school-age children experience the largest declines in employment during the pandemic, just as in high-income countries. A key difference is the role of the sectoral distribution of employment: whereas in high-income economies reduced employment in contact-intensive services had a large impact on women, this sector plays a minor role in low-income countries. Another difference is that women's employment rebounded much more quickly in low-income countries. We conjecture that large income losses without offsetting government transfers drive up labor supply in low-income countries during the recovery.

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