Surprising Development

Kevin Lewis

June 08, 2020

Leader Value Added: Assessing the Growth Contribution of Individual National Leaders
William Easterly & Steven Pennings
NBER Working Paper, May 2020


Previous literature suggests that leaders matter for growth in general. This paper asks which leaders matter and develops a methodology to estimate the growth contribution of individual leaders and calculate its precision. The findings show that few leaders have statistically significant contributions; it is difficult to know who is good for growth and who is not. The paper also finds that the most intuitive estimate of a leader’s contribution — the average growth rate during tenure — is largely useless for measuring his or her true contribution. Consequently, many leaders with statistically significant growth effects are surprises. Moreover, leaders in non-democratic countries are no more likely to be statistically significant than leaders in democratic ones.

Early investments in state capacity promote persistently higher levels of social capital
Jeffrey Jensen & Adam Ramey
Proceedings of the National Academy of Sciences, 19 May 2020, Pages 10755-10761


Social capital has been shown to positively influence a multitude of economic, political, and social outcomes. Yet the factors that affect long-run social capital formation remain poorly understood. Recent evidence suggests that early state formation, especially investments in state capacity, are positively associated with higher levels of contemporary social capital and other prosocial attitudes. The channels by which early state capacity leads to greater social capital over time are even less understood. We contribute to both questions using the spatial and temporal expansion of the US postal network during the 19th century. We first show that county-level variation in post office density is highly correlated with a bevy of historical and contemporary indicators of social capital (e.g., associational memberships, civic participation, health, and crime). This finding holds even when controlling for historical measures of development and contemporary measures of income, inequality, poverty, education, and race. Second, we provide evidence of an informational mechanism by which this early investment in infrastructural capacity affected long-run social capital formation. Namely, we demonstrate that the expansion of the postal network in the 19th century strongly predicts the historical and contemporary location of local newspapers, which were the primary mode of impersonal information transmission during this period. Our evidence sheds light on the role of the state in both the origins of social capital and the channels by which it persists. Our findings also suggest that the consequences of the ongoing decline in local newspapers will negatively affect social capital.

Persistence through Revolutions
Alberto Alesina et al.
NBER Working Paper, April 2020


The Chinese Communist Revolution in the 1950s and Cultural Revolution from 1966 to 1976 aimed to eradicate inequality in wealth and education, to shut off intergenerational transmission, and to eliminate cultural differences in the population. Using newly digitized archival data and linked contemporary household surveys and census, we show that the revolutions were effective in homogenizing the population economically and culturally in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges today. Grandchildren of the pre-revolution elites earn 17 percent more than those from non-elite households. In addition, the grandchildren of pre-revolution elites differ in their cultural values: they are less averse to inequality, more individualistic, more pro-market, more pro-education, and more likely to see hard work as critical to success. Through intergenerational transmission, socioeconomic conditions and cultural traits thus survived one of the most aggressive attempts to eliminate differences in the population and to foster mobility.

Fertility Restrictions and Life-Cycle Outcomes: Evidence from the One-Child Policy in China
Wei Huang, Xiaoyan Lei & Ang Sun
Review of Economics and Statistics, forthcoming


This study considers the experience of China’s one-child policy to examine how fertility restrictions affect economic and social outcomes over a lifetime. Using variations in these penalties across provinces and over time, we find that exposure to stricter fertility restrictions when young leads to higher education levels, more white-collar jobs, delayed marriage, and lower fertility rates. Further consequences include lower rates of residing with the elderly, higher household income, consumption, and savings. Finally, exposure to stricter fertility restrictions in early life increases female empowerment. Overall, fertility restrictions imposed when people are young have powerful effects throughout their life cycle.

Regimes and Industrialization
John Gerring, Haakon Gjerløw & Carl Henrik Knutsen
University of Texas Working Paper, April 2020


A large literature addresses the impact of regimes on domestic policies and outcomes, e.g., education, health, inequality, redistribution, public spending, wages, infrastructure, volatility, productivity, and economic growth. We add to this literature by focusing on how regime type relates to another vital outcome, namely industrialization. We argue that autocratic leaders are more likely to adopt an economic model of development centered on heavy industry because of three factors that distinguish democratic and autocratic regimes: different social bases, different security concerns, and different policy tools. Accordingly, autocracies have stronger incentives and better capabilities to pursue a rapid and comprehensive course of industrialization. We test the hypothesis that autocracy enhances industrialization by using different measures of industrialization in a dataset spanning 200 years and most countries of the world. After a comprehensive series of tests, we conclude that industrialization stands out as one of the few areas where autocracies may enjoy a significant advantage over democracies.

Leveraging mobile phones to attain sustainable development
Valentina Rotondi et al.
Proceedings of the National Academy of Sciences, forthcoming


For billions of people across the globe, mobile phones enable relatively cheap and effective communication, as well as access to information and vital services on health, education, society, and the economy. Drawing on context-specific evidence on the effects of the digital revolution, this study provides empirical support for the idea that mobile phones are a vehicle for sustainable development at the global scale. It does so by assembling a wealth of publicly available macro- and individual-level data, exploring a wide range of demographic and social development outcomes, and leveraging a combination of methodological approaches. Macro-level analyses covering 200+ countries reveal that mobile-phone access is associated with lower gender inequality, higher contraceptive uptake, and lower maternal and child mortality. Individual-level analyses of survey data from sub-Saharan Africa, linked with detailed geospatial information, further show that women who own a mobile phone are better informed about sexual and reproductive health services and empowered to make independent decisions. Payoffs are larger among the least-developed countries and among the most disadvantaged micro-level clusters. Overall, our findings suggest that boosting mobile-phone access and coverage and closing digital divides, particularly among women, can be powerful tools to attain empowerment-related sustainable development goals, in an ultimate effort to enhance population health and well-being and reduce poverty.

Economic Development in Puerto Rico after US Annexation: Anthropometric Evidence
Brian Marein
Economics & Human Biology, forthcoming


I consider economic development in Puerto Rico following its annexation by the United States in 1898, a watershed moment in the history of the island and the pinnacle of American imperialism in Latin America. Drawing on data from three surveys, I show that male height in Puerto Rico increased at more than twice the average rate for Latin America and the Caribbean between 1890 and 1940. I also show that Puerto Ricans at mid-century were among the tallest Latin Americans outside of Argentina and Uruguay. The evidence supports the conclusion that conditions improved substantially after US annexation, in stark contrast to the prevailing view in the literature.

Patents, Innovation, and Development
Bronwyn Hall
NBER Working Paper, May 2020


I survey some recent research on the role of patents in encouraging innovation and growth in developing economies, beginning with a brief history of international patent systems and facts about the current use of patents around the world. I discuss research on the implications of patents for international technology transfer and domestic innovation. This is followed by a review of recent work by myself and co-authors on regional patent systems, the impact of patents on firm performance, and the impact on pharmaceutical patenting and domestic innovation. The conclusion suggests that patents may be relatively unimportant in development, even for middle income countries.

Frontiers, warfare and economic geography: The case of Spain
Daniel Oto-Peralías
Journal of Development Economics, forthcoming


This paper investigates the potential of frontiers to shape the economic geography of countries. I focus on the case of Spain to explore how historical frontier warfare affects the colonization of the territory and the distribution of the population across the space. Exploiting a spatial discontinuity in military insecurity during the Christian colonization of central Spain in the Middle Ages, my findings suggest that medieval frontier warfare heavily conditioned the settlement of the territory, resulting in a sparse occupation of the space, low settlement density and high population concentration. These initial features of the colonization process were already visible in the early 16th century and have persisted to this day, with potential negative consequences for economic development.

Stigma or cushion? IMF programs and sovereign creditworthiness
Kai Gehring & Valentin Lang
Journal of Development Economics, forthcoming


Policymakers in crisis countries often hesitate to enter IMF programs out of the fear that they trigger adverse reactions on financial markets. We explain why credit ratings and investor assessments are reliable measures of creditworthiness during crises, and examine how IMF programs affect them with three distinct identification strategies. The first strategy exploits the differential effect of changes in IMF liquidity on loan allocation as an instrument, the second uses the exact timing of program agreements, and the third provides text-based evidence from rating agency statements. When accounting for endogenous selection, we find that IMF programs help countries regain their creditworthiness. Even though IMF programs tend to result in economic contractions, the agreement on a program is perceived as a positive signal on financial markets. Our text-based analysis supports this signaling effect and suggests that the content of programs matters for how they are perceived.

Tribe or Title? The Effect of Coethnic Neighbors on the Demand for Formal Property Rights in a Tanzanian Slum
Matthew Collin
Economic Development and Cultural Change, April 2020, Pages 899-945


This paper examines the relationship between ethnic heterogeneity and the demand for formal land tenure in urban Tanzania. Using a unique census of two highly fractionalized unplanned settlements in Dar es Salaam, I show that households located near coethnics are significantly less likely to purchase a limited form of land tenure offered by the government. I attempt to address the issue of endogenous sorting by conditioning on a household’s choice of coethnic neighbors upon arrival in the neighborhood. I also find that coethnic residence predicts lower levels of perceived expropriation risk but not perceived access to credit or contributions to local public goods. These results suggest that close-knit ethnic groups may be less likely to accept state-provided goods due to their ability to generate reasonable substitutes, in this case protection from expropriation. The results are robust to different definitions of coethnicity and spatial cutoffs, controls for family ties and religious similarity, and spatial fixed effects. Finally, the main result is confirmed using a large-scale administrative data set covering more than 20,000 land parcels in the city, exploiting ethnically unique last names to predict tribal affiliation.


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