The holidays are upon us - a time to relax, see friends and family, and generally catch up. If you are anything like me then catching up will involve reading, so I thought that I’d share with you ten of my favorite papers in Development from 2018 (published and accepted for publication this year). They reflect my own personal tastes rather than any specific external metric. Since this is the holiday season and a new year beckons, I have favored papers which convey messages of hope (tied to appropriate policies). Happy holidays and happy reading!
- Concerns about climate change call for stricter environmental regulation. But it is not enough to enact regulation; rules also need to be properly implemented. In “The Value of Regulatory Discretion: Estimates from Environmental Inspections in India (Econometrica, Nov. 2018) by Duflo, Greenstone, Pande and Ryan, you can read about the experience of the Indian state of Gujarat. Who would have guessed that giving regulators discretion leads to desirable outcomes? This is even more surprising after the same authors showed in an earlier paper (Quarterly Journal of Economics, 2013) that the audit system which the same regulators had put in place was largely corrupted over time.
- More on how implementation matters: in “Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia”, (Journal of Political Economy, April 2018), Banerjee, Hanna, Kyle, Olken, and Sumarto show how sending cards with program information to some beneficiaries of a rice subsidy program reduced leakage, leading to large gains for the intended recipients.
- How can we harness technology for development? “The Arrival of Fast Internet and Employment in Africa” (American Economic Review, forthcoming) by Jonas Hjort and Jonas Poulsen sends a message of hope by showing how access to fast Internet has led to employment gains in many parts of Africa, especially among the higher-skilled. Firm entry, increased productivity and exporting contributed to the gains.
- But the flipside of technology is that it has led to disruptions in labor markets. The changing nature of work brought about by automation has led to calls for increased social protection. What form exactly should social protection take? “Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries” (Journal of Economic Perspectives, Fall 2018) by Hanna and Olken, explains why Universal Basic Income (UBI) may be a bad idea for developing countries.
Since 2018 marked the return of the “tariff”, a reflection on the relationship between Trade and Development seems in order. The following four papers tell the story from different perspectives:
- Trade can promote growth, formal employment, and structural transformation in developing countries. “Export Markets and Labor Allocation in a Low-Income Country” (American Economic Review, July 2018) by Pavcnik and McCaig describes how export growth stemming from trade liberalization transformed the economy of Vietnam.
- But trade liberalization may not be enough - countries may also need a little help from their governments. State subsidies are hard to measure, but in “Detection and Impact of Industrial Subsidies: The Case of Chinese Shipbuilding” (Review of Economic Studies, April 2018), Myrto Kalouptsidi shows how economic methodology can be leveraged to detect industrial subsidies.
- Trade and entry deregulation can create large gains for consumers. “Retail Globalization and Household Welfare: Evidence from Mexico” (Journal of Political Economy, February 2018), by Atkin, Faber, and Gonzalez-Navarro explains how the entry of global retail chains in Mexico benefited consumers, albeit the gains were regressive.
- Lastly, trade has distributional impacts, generating winners and losers. Read about how workers in different regions of Brazil were affected by trade liberalization in “Margins of Labor Market Adjustment to Trade” (Journal of International Economics, forthcoming) by Dix-Carneiro and Kovak.
- Policymakers in many developing countries are eager to promote small and medium-sized enterprises (SMEs). In “The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico (Journal of Political Economy, April 2018) Bruhn, Karlan and Schoar conduct a Randomized Controlled Trial (RCT) and find that management consulting has large effects on total factor productivity, employment, and the wage bills of SMEs.
- Informality is pervasive in low-income countries and often considered anathema to development and growth. For a fresh perspective on the nature of informality and the kind of policies that are best suited to address it, read “Firms, Informality and Development: Theory and Evidence from Brazil” (American Economic Review, August 2018) by Gabriel Ulyssea.