Essays on Growth, Political Economy and Development

University dissertation from Stockholm : Department of Economics, Stockholm University

Abstract: This thesis has three self-contained articles.Economic growth and trade in human capital: A salient empirical pattern in the East Asian “miracle” is a large increase in output and factor accumulation despite  only a modest increase in TFP. I develop and calibrate a model of growth and catch-up to provide a possible explanation. A novel element of the model is a globalized education market allowing human capital transfer from frontier to developing economies – an assumption motivated by the experience of countries like Korea and Taiwan where domestic universities employed graduates of Western universities to provide advanced training.The political economy of urban bias in dictatorial regimes. In many developing countries, public resource allocation is often biased against the rural population – a policy that hurts the vast majority of the poor living in rural areas. This paper develops a dynamic political economy model of urban bias in a dictatorial regime. A novel result of the model is that urban bias can emerge in predominantly agrarian economies even if there is no bias  in political power toward urban residents. The empirical evidence from a recently compiled country-level panel dataset on agricultural taxes/subsidies is consistent with the prediction of the model.Does agricultural growth cause manufacturing growth? Empirically assessing the impact of agricultural growth on manufacturing growth is challenging because of endogeneity concerns. This paper attempts to circumvent the identification challenge by using weather variations to instrument for agricultural growth. The IV estimations show that agricultural growth has a significant positive impact on manufacturing growth, and it is larger than the OLS estimates. I discuss the empirical implications for agricultural policies, efficiency of the manufacturing sector, and for the role of agricultural growth in Africa's industrialization.

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