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IO meets development

Fixing financial markets when other key markets are broken, too: Guest post by Alex Cohen

This is the eleventh in our series of posts by students on the job market this year
Researchers, policymakers and aid organizations have devoted lots of attention to improving access to credit and, increasingly, insurance for small firms and farms in developing countries. Yet some recent papers find puzzlingly weak effects of insurance and credit on growth and profits (Cole et al. 2014, Banerjee et al. forthcoming).
 One potential explanation may be that in developing countries, it’s not just financial markets that have imperfections, but that other key markets, such as markets for labor and land, have problems, too. In particular, high costs of supervising or finding trustworthy employees may make it expensive to add labor (Eswaran and Kotwal 1986, Fafchamps 2003, Foster and Rosenzweig 2011). For farms specifically, missing land markets may further constrain expansion (Goldstein and Udry 2008, Adamopoulos and Restuccia 2014).

Jim Levinsohn on the scope for doing work with industrial organization and development

David McKenzie's picture
Late last year I posted several posts on why we don’t see more work combining industrial organization and development. I just received some thoughts on this question from Jim Levinsohn, Professor of Economics and Management at Yale, and a long-time leader in this area. He kindly agreed to let me share them here:
On why we don’t see more work

IO and Development Part 3: Where are some opportunities for work intersecting these areas?

David McKenzie's picture
The first two posts on this topic this week have looked at the gap in the use of IO in development, and some possible reasons why IO tools might not be used as much. Today, the final post in my Q&A with Dan Keniston [DK] and Katja Seim [KS], looks at where there might be low-hanging fruit from better use of methods from IO in development.

Why don’t we see more work at the intersection of IO and Development? Part Two - methods

David McKenzie's picture
Yesterday’s Q&A with Dan Keniston [DK] and Katja Seim [KS] looked at whether there was a gap in the use of IO methods in development, and for some examples of good work at this intersection of fields. Today I ask about a couple of reasons why we don’t see as much work in this area.

Why don’t we see more work at the intersection of IO and Development? Part One – is there a gap?

David McKenzie's picture
Ever since I was in grad school I remember hearing people say that development and industrial organization (IO) seem like natural fields for graduate students to specialize in, and yet my sense is that far fewer people take this combination than development and labor, or development and public economics for example. This is seen in literature produced – the figure below shows the share of the last 100 BREAD Working Papers in development that have different subfields (according to their JEL codes):