Essays in International Trade and Development
Laoprapassorn, Mos
2022
Abstract
This dissertation contains three independent essays in international trade and development, with the aim of understanding the mechanisms through which trade impacts development. The first chapter examines how market power along agricultural value chains mediates the effects of policies on the welfare of farmers. Using microdata on farmers and rice mills in Thailand, I document heterogeneity in the spatial density of rice mills. I further provide reduced-form evidence that a one standard deviation increase in local competition among rice mills leads to a 7.7% increase in farmer prices. Informed by the empirical findings, I propose and estimate a quantitative spatial model that accounts for the market power and entry-location choices of intermediaries. I then simulate two policy counterfactuals. I find that gains to farmers from a country-wide improvement in road infrastructure are regressive: the percentage increase in income of the top decile farmers is 11% larger than that of the bottom decile. Changes in the entry decisions of the rice mills further exacerbate the regressive effect, more than doubling the gap between the change in income of the top and bottom decile farmers. The second counterfactual simulation shows that the market power of intermediaries could lead to a lower than socially optimal level of technology adoption among farmers. The second chapter, co-authored with Michelle Lam, studies the long-term effect of the ancient Silk Road trade on modern development. Specifically, we examine whether locations along the highland Silk Road continue to be relatively more developed than other locations in the highland region that were not on the Silk Road. We proxy for modern development using high-resolution satellite imagery. To provide a causal effect between proximity to the Silk Road and modern development, we adopt a novel instrumental variable, using a simulated seasonal mobility pattern of the nomadic pastoralists from Frachetti et al. (2017) as an instrument for the locations of the Silk Road sites. We find a significant and robust positive relationship between proximity to Silk Road sites and modern development measures; an increase in the distance to the Silk Road by one standard deviation decreases the night lights intensity by 10.0%. The third chapter examines the dynamics of export entry and exit under uncertainty. Data from disaggregated international trade transactions often reveals a high degree of turnover among exporters, an observation at odds with a standard trade model with sunk cost of entry into the export market. Using Chilean plant-level data from the manufacturing census, I establish that a third of the exporter turnover among plants arises from plants that export for only one year. I document the differences in productivity across different groups of exporting plants. I find that incumbent exporters are the most productive group, followed by export entrants who export beyond one year; one-year exporters are, on average, the least productive group among the exporting plants. Informed by these stylized facts, I propose a dynamic trade model with uncertainty in the cost of exporting and a heterogeneous productivity process across firms. I demonstrate that the predicted aggregate responses of the economy to external shocks in my proposed model are significantly different from those in existing models. On impact, following a temporary 10% exchange rate depreciation, the change in the export participation rate in my proposed model is three times smaller than that in the canonical model.Deep Blue DOI
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International Trade Development
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