Political Economy, Conflict Economics, Economic Growth and Development, Regional Economics, Trade
Cohesive Institutions and Political Violence (with Thiemo Fetzer, forthcoming Review of Economics and Statistics, previously published as CAGE Working Paper No. 377, version, August 2019)
Can institutionalized transfers of resource rents be a source of civil conflict? Are cohesive institutions better in managing distributive conflicts? We study these questions exploiting exogenous variation in revenue disbursements to local governments together with new data on local democratic institutions in Nigeria. We make three contributions. First, we document the existence of a strong link between rents and conflict far away from the location of the actual resource. Second, we show that distributive conflict is highly organized involving political militias and concentrated in the extent to which local governments are non-cohesive. Third, we show that democratic practice in form having elected local governments significantly weakens the causal link between rents and political violence. We document that elections (vis-a-vis appointments), by producing more cohesive institutions, vastly limit the extent to which distributional conflict between groups breaks out following shocks to the available rents. Throughout, we confirm these findings using individual level survey data.
Fast Track to Growth? Railway Access, Population Growth and Local Displacement in 19th Century Switzerland (with Konstantin Büchel, Journal of Economic Geography, 2018; previously published as CEP Discussion Paper No. 1538)
We study the effect of railway access on population growth in 19th century Switzerland. Our analysis is based on geo-referenced railway network information and an inconsequential units IV approach. Gaining direct railway access increased annual population growth by 0.4 percentage points, while municipalities in close vicinity but no direct access (i.e. 2–10 km distance) experienced a growth slump of similar magnitude. We interpret these findings as evidence of highly localised displacement effects related to railway connections.
The Local Political Resource Curse (Working Paper, July 2018)
I study the political resource curse in Nigeria. Local government councils are either elected by the people or illegally appointed as caretaker committees by the state governor. State governments in turn are likely to be captured by special-interest groups on account of rent-seeking opportunities. Tax revenues depend heavily on oil production and global oil prices, are collected centrally, and then allocated every month to the 36 states and 774 local government councils. I argue that by withholding local elections, state governors gain firm control over the oil revenue transfers that flow into local governments. I collect unique data on local government council elections through an extensive media content analysis of Nigerian newspapers articles. I combine it with monthly tax revenue disbursements by the Federal Accounts Allocation Committee for the post-autocratic period of 1999 to 2013. Exploiting the exogenous variation in the global oil price, I apply an instrumental variable approach to identify the effect of conducting local council elections or appointing caretaker committees instead on economic development proxied by nighttime light emissions, and public goods provision. The findings support the presence of a political resource curse and suggest that holding local elections increases accountability and facilitates development.
Does Proximity to Foreign Direct Investment Stimulate Productivity Growth of Domestic Firms? Firm Level Evidence from Vietnam (with Huong Quynh Nguyen, WTI Working Paper 10/2016)
Much attention has been paid to foreign investment spillovers in the literature, since inward foreign direct investment is regarded as a key engine of industrial growth and technological progress. However, little clear evidence has been found with regard to the relevance of geographic proximity for spillover effects, owing to a lack of location specific information. We therefore study the spatial component of spillover effects from foreign direct investment on total factor productivity (TFP) of domestic manufacturing firms in Vietnam from 2005 to 2010. Firm level TFP is estimated by applying a semi-parametric method. We geo-reference firms by using the smallest administrative unit (ward) and compile a unique data set containing information of firms location to exploit the variation in the presence of foreign firms around each domestic firm over time. Benefiting from enhanced spatial accuracy over previous studies, our empirical results using a first differenced two-stage least squares estimator are threefold. First, they show positive local spillover effects of foreign investment on domestic firms in the same industry. The effects are strongest and highly significant within a radius of 2 km to 10 km, and they show a distinct decay pattern within 10-50 km. Second, small and unproductive firms benefit disproportionately from the presence of foreign firms in their neighbourhood. Third, manufacturing vertical spillovers are also localised while vertical spillovers from the service sector are less geographically restricted.
Ethnicity, Inequality, and Civil Conflict (Working Paper, University of Bern, January 2014)
This paper presents an analysis of the effects of inequality on the incidence of civil conflict. One prominent explanation in the conflict literature is that rebel groups are motivated by grievance. This study conducts a detailed inquiry of the grievance hypothesis by analyzing the effects of economic and political horizontal (inter-group) and vertical (inter-individual) inequalities on incidence of conflict. A panel data set over the period 1946-2005 at the level of 244 ethnic groups is assembled. In contrast to related studies, long time series of infant mortality and education attainment are constructed to measure socio-economic horizontal inequality. Accounting for the serial correlation in the incidence of civil conflict, this study finds that economic and political horizontal inequalities significantly affect the risk of incidence of civil conflict. In particular, high socio-economic horizontal inequality, captured by infant mortality rates, is associated with lower probability of conflict. In comparison with all other forms of inequalities analyzed, political horizontal inequality exhibits the most robust association with civil conflict. Ethnic groups, which are excluded from the executive-level of the government, are associated with significantly higher risks of violent conflict.