Essays on development and international economics

Brey, Björn (2021) Essays on development and international economics. PhD thesis, University of Nottingham.

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My doctoral thesis comprises three chapters focussing on the impact of technology and trade on long-run economic development and political outcomes. The first chapter explores the effect of the early adoption of electricity at the end of the 19th in Switzerland on local economic development in the long-run. The second chapter explores the role of colonial trade on economic and political developments in British India during the 20th century. The third chapter analyses the effect of recent technological change, mainly automation, on the making of immigration policy in the United States since the 1970s.

The first chapter explores the effect of the early adoption of technology on local economic development. While timing and intensity of technology adoption are key drivers of economic divergence across countries, the initial impact of new technologies within advanced countries has been incredibly illusive. Resolving this puzzle, this chapter documents that the early adoption of electricity across Switzerland was conducive to local economic development not just in the short-run, but also in the long-run. Exploiting exogenous variation in the potential to produce electricity from waterpower, this chapter documents that electricity adoption at the end of the 19th century led to structural transformation. However, despite access to electricity becoming quickly universal in the early 20th century, due to the expansion of the electricity grid, economic development did not converge across areas. Instead, areas which adopted electricity early continue to be more industrialized and have higher incomes today. In particular, the geographical distribution of the newly emerging chemical industry was shaped by early electricity adoption, while employment gains through the building and operation of new power plants were mostly short-lived. The main mechanism through which differences in economic development persist in the long-run is through increased human capital accumulation and innovation, rather than persistent differences in the way electricity is used.

The second chapter explores the role of colonial trade in which colonies commonly specialized in the export of primary products in exchange for manufactured goods. Did this pattern of trade prevent industrialisation in colonies? And did the absence of industrialisation help to keep colonies under control? To answer these questions, the chapter examines the impact of the temporary trade collapse between Britain and India due to World War I, on industrialisation and anti-imperial feelings in India. Exploiting cross district variation in exposure to the trade shock, the chapter documents that districts more exposed to the trade shock experienced substantially faster industrial growth in 1911-21, placing them on a higher level of industrialisation which persisted up to today. Using the WWI trade shock as an instrument for industrialisation levels, it also highlights that more industrialised districts were more likely to express anti-imperial feelings in 1922, and to vote for the Indian National Congress in the landmark election of 1937.

The third chapter explores whether recent technological change, in the form of automation, affected immigration policy in the United States? The chapter highlights that as automation shifted employment from routine to manual occupations at the bottom end of the skill distribution, it increased competition between natives and immigrants, consequently leading to increased support for restricting low-skill immigration. This hypothesis is formalized theoretically in a partial equilibrium model with constant elasticity of substitution in which technology leads to employment polarization, and policy makers can vote on immigration legislation. These predictions are empirically evaluated by analysing voting on low-skill immigration bills in the House of Representatives during the period 1973-2014. First, there is evidence that policy makers who represent congressional districts with a higher share of manual employment are more likely to support restricting low-skill immigration. Second, the chapter presents empirical evidence that representatives of districts which experienced more manual-biased technological change are more likely to support restricting low-skill immigration. Finally, the chapter highlights that this did not affect trade policy, which is in line with automation having increased employment in occupations exposed to low-skill immigration, but not those exposed to international trade.

Item Type: Thesis (University of Nottingham only) (PhD)
Supervisors: Facchini, Giovanni
Upward, Richard
Keywords: 1) Electrification, General-Purpose-Technologies, Industrialization; 2) Colonial trade, India, Infant-industry argument, Decolonisation; 3) Political Economy, Voting, Immigration Policy, Technological Change
Subjects: H Social sciences > HC Economic history and conditions
H Social sciences > HF Commerce
T Technology > T Technology (General)
Faculties/Schools: UK Campuses > Faculty of Social Sciences, Law and Education > School of Economics
Item ID: 64728
Depositing User: Brey, Bjoern
Date Deposited: 31 Jan 2024 16:12
Last Modified: 02 Feb 2024 08:32

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