Civilized
State reach and development in Africa since the 1960s: New data and analysis
Carl Müller-Crepon
Political Science Research and Methods, forthcoming
Abstract:
Prominent arguments hold that African states’ geography limits state capacity, impedes public service provision, and slows economic development. To test this argument, I collect comprehensive panel data on a proxy of local state capacity, travel times to national and regional capitals. These are computed on a yearly 5 × 5 km grid using time-varying data on roads and administrative units (1966–2016). I use these data to estimate the effect of changes in travel times to capitals on local education provision, infant mortality rates, and nightlight emissions. Within the same location, decreases in travel times to its capitals are robustly associated with improved development outcomes. The article advances the measurement of state capacity and contributes to understanding its effects on human welfare.
Demographic Transitions Across Time and Space
Matthew Delventhal, Jesús Fernández-Villaverde & Nezih Guner
NBER Working Paper, November 2021
Abstract:
The demographic transition -- the move from a high fertility/high mortality regime into a low fertility/low mortality regime -- is one of the most fundamental transformations that countries undertake. To study demographic transitions across time and space, we compile a data set of birth and death rates for 186 countries spanning more than 250 years. We document that (i) a demographic transition has been completed or is ongoing in nearly every country; (ii) the speed of transition has increased over time; and (iii) having more neighbors that have started the transition is associated with a higher probability of a country beginning its own transition. To account for these observations, we build a quantitative model in which parents choose child quantity and educational quality. Countries differ in geographic location, and improved production and medical technologies diffuse outward from Great Britain. Our framework replicates well the timing and increasing speed of transitions. It also produces a correlation between the speeds of fertility transition and increases in schooling similar to the one in the data.
Institutions and literacy rates: The legacy of Napoleonic reforms in Italy
Michele Postigliola & Mauro Rota
European Review of Economic History, November 2021, Pages 757–779
Abstract:
The provincial gap in human capital at the time of Italy’s unification is a plausible explanation for the North–South divide of the following decades. We show that the roots of the literacy gap that existed in 1861 can be traced back to Napoleonic educational reforms enacted between 1801 and 1814. We use exogenous variation in provincial distance to Paris to quantify effects, linking the duration of Napoleonic control to human capital. If the south had experienced the same Napoleonic impact as the north, southern literacy rates would have been up to 70 percent higher than they were in 1861.
Technology Transfer and Early Industrial Development: Evidence from the Sino-Soviet Alliance
Michela Giorcelli & Bo Li
NBER Working Paper, November 2021
Abstract:
This paper studies the causal effect of technology and knowledge transfers on early industrial development. Between 1950 and 1957, the Soviet Union supported the “156 Projects” in China for the construction of technologically advanced, large-scale, capital-intensive industrial facilities. We exploit idiosyncratic delays in project completion and the unexpected end of the Sino-Soviet Alliance, due to which some projects received Soviet technology embedded in capital goods and know-how, while others were eventually realized by China alone using domestic technology. We find that receiving both Soviet technology and know-how had large, persistent effects on plant performance, while the effects of receiving only Soviet capital goods were short-lived. The intervention generated horizontal and vertical spillovers, as well as production reallocation from state-owned to privately owned companies since the late 1990s.
Does Perceived Governance Quality Improve Toward the North and South Poles for Eco-Cultural Reasons?
Evert Van de Vliert & Lucian Gideon Conway
Journal of Cross-Cultural Psychology, forthcoming
Abstract:
Good government is vital to human society. But what proximal and distal factors influence this collective goodness perception? Here, we investigate how and why multi-component evaluations by many institutional observers of public governance vary along the north-south rather than east-west axis of the Earth. Across 190 countries, we show that governance quality improves from the equator toward the North and South Poles in both the Eastern and Western Hemispheres. By contrast, governance quality hardly varies from east to west. National wealth, surfacing as the main driver of good government, is spatially distributed along latitude and longitude in the same striking way. In broader detail, governance quality is psychologically accounted for by cultural, economic, and pathogenic explanations, all nested within a climate-based explanation. Taken in total, the results suggest a chain of increasingly distal explanations of the equator-to-pole improvements in perceived governance quality.
Mental Health Therapy as a Core Strategy for Increasing Human Capital: Evidence from Ghana
Nathan Barker et al.
NBER Working Paper, October 2021
Abstract:
We study the impact of cognitive behavioral therapy (CBT) for individuals selected from the general population of poor households in rural Ghana. Results from 2-3 months after a randomized intervention show strong impacts on mental and physical health, cognitive and socioemotional skills, and downstream economic outcomes. We find no evidence of heterogeneity by baseline mental distress; we argue that this is because CBT can improve human capital for a general population of poor individuals through two pathways. First, CBT reduces vulnerability to deteriorating mental health; and second, CBT directly improves bandwidth, increasing cognitive and socioemotional skills and hence economic outcomes.
Rainfall risk, fertility and development: Evidence from farm settlements during the American demographic transition
Michael Grimm
Journal of Economic Geography, July 2021, Pages 593–618
Abstract:
I analyze whether variation in rainfall risk played a role in the demographic transition. The hypothesis is that children constituted a buffer stock of labor that could be mobilized in response to income shocks. Identification relies on fertility differences between farm and non-farm households within counties and over time. The results suggest that in areas with a high variance in rainfall the fertility differential was significantly higher than in areas with a low variance in rainfall. This channel is robust to other relevant forces and the spatial correlation in fertility. The effect disappeared as irrigation systems and agricultural machinery emerged.
The Economic Consequences of the Opium War
Wolfgang Keller & Carol Shiue
NBER Working Paper, October 2021
Abstract:
This paper studies the economic consequences of the West’s foray into China after the Opium War (1839-42), when Western colonial influence was introduced in dozens of so-called treaty ports. We document a turnaround during the 19th century in the nature of China’s capital markets. Whereas before the Opium War, coastal cities were of relatively minor importance, the treaty port system of the West transformed China into an economy focused on coastal areas and on international trade that aligned with the trading interests of the West. We show, first, that the West had a positive impact on China’s economy during the 19th century. It brought down local interest rates, and regions under Western influence exhibited both higher rates of industry growth and technology adoption. Second, the geographic scope of influence went far beyond the ports, impacting most of China. Interest rates fell by more than a quarter in the immediate vicinity of the ports and still by almost ten percent at distances of 450 kilometers from treaty ports. The development of China was not simply propelled by its own pre-1800 history, or by post-1978 reforms. The nearly 100 years of semi-colonization have shaped China’s economy today as one focused on the coastal areas.
Corruption and growth: Historical evidence, 1790–2010
Luca Uberti
Journal of Comparative Economics, forthcoming
Abstract:
We use a newly assembled indicator of corruption from Varieties of Democracy (V-Dem) to examine the effects of corruption on economic growth. The V-Dem indicator is coded for almost all contemporary and historical polities since the year 1900 and, for some countries, since the French Revolution. This global dataset allows us to exploit long-run, slow-moving variation within countries for identification, circumventing many of the difficulties faced by previous studies based on cross-section data or short panels. We present robust evidence of a negative effect of corruption on steady-state growth. Yet, we find that corruption interacts with political regime type, giving rise to heterogeneous effects. In particular, corruption is found to be significantly more deleterious for growth in democracies than in autocracies. Since corruption tends to be decentralised in democracies and centralised in autocracies, these findings are in line with theories of the ‘industrial organisation’ of corruption. We find little to no evidence that institutional weaknesses along other dimensions (state capacity, regulatory quality, property rights protection) make corruption any less harmful for growth, casting doubt on the thesis that corruption may ‘grease the wheels’ of dysfunctional institutions. Our findings provide a rationale to target anti-corruption efforts to young democracies.
The effect of sanctions on economic freedom
David Lektzian & Gor Mkrtchian
Social Science Quarterly, forthcoming
Abstract:
When states are targeted with sanctions, they may respond with alterations of their domestic economies meant to counter any negative effects of sanctions. In this article, we argue that these alterations tend to lead to increased state command of the economy and reduced economic freedom, as sanctions create opportunities and incentives that encourage target states and firms within them to pursue increased state control of the economy. These declines in economic freedom may come about through a number of causal mechanisms, several of which will be elaborated upon in this article. We use large-N empirical analysis of all aspects of the Fraser Institute's Index of Economic Freedom and find that sanctions associate with reductions in most components of economic freedom.
Considering the Counterfactual: Real Wages in the First Industrial Revolution
Nicholas Crafts & Terence Mills
Economic Journal, forthcoming
Abstract:
We investigate a structural model of demographic-economic interactions for England during 1570 to 1850. We estimate that the annual rate of population growth consistent with constant real wages was 0.4% before 1760 but 1.5% thereafter. We find that exogenous shocks increased population growth dramatically in the early decades of the Industrial Revolution. Simulations of our model show that if these demographic shocks had occurred before the Industrial Revolution the impact on real wages would have been catastrophic and that these shocks were largely responsible for very slow growth of real wages during the Industrial Revolution.
Big fish in thin markets: Competing with the middlemen to increase market access in the Amazon
Viva Ona Bartkus et al.
Journal of Development Economics, forthcoming
Abstract:
Middlemen are ubiquitous in supply chains. In developing countries they help bring products from remote communities to end markets but may exert strong market power. We study a cooperative intervention which organizes together poor fishing communities in the Amazon — one of the poorest and most remote regions of the world — to purchase large boats in order to partially bypass middlemen and deliver their fish directly to market. We find that the intervention increases income by 27%, largely through an increase in price received, and also increases consumption. Moreover, the intervention is highly cost effective with the projected stream of income gains easily covering the cost of the investment. Finally, we formalize a model in which the market power of middlemen itself can create a poverty trap, which can be eliminated with cooperative investment.