Finance, Development, and Growth
Paper Session
Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)
- Sean Higgins, Northwestern University
Bridging the Information Gap: Sowing the Seeds of Productivity with High-Speed 4G Internet
Abstract
Can high-speed internet boost information access and enhance productivity? Combining granular geographic data on the introduction of 4G with remote-sensing data on agricultural productivity, we show that the improvement in information dissemination due to the introduction of 4G leads to an increase in productivity, fertilizer consumption, and credit uptake. Our identification strategy exploiting the staggered state-level introduction of Rights of Way (RoW) policies meant to promote the growth of telecom infrastructure echoes similar results. Overall, we find that six years after the introduction of 4G internet, the annual income of agricultural households grew by 14.5%. Using detailed farmer-level internet-browsing data, we show that the introduction of 4G is related to internet adoption and acquiring agri-related information. Exploiting spatial heterogeneity in the value, reliability and accuracy of information we argue that 4G improves productivity by improving access to information. We document that the decentralized nature of internet-based information access dominates traditional call or text-based information access by circumventing frictions associated with trust in the state. While our results indicate that high-speed internet is an important tool for information dissemination, merely introducing internet infrastructure may not be sufficient. Information that is disseminated must be reliable and valuable, making internet access a complement to information generation.Finance, Structural Change, and Growth
Abstract
This paper studies the interplay between the sectoral allocation of credit and long-run economic development. We document new Financial Kuznets Facts: as economies grow, (i) the share of manufacturing credit relative to value added falls, (ii) the share of real estate credit rises, and (iii) the reliance on and price of real estate collateral increase. A two-sector structural change model with heterogeneous collateral constraints explains these patterns through a relative loosening of financing constraints in real estate as countries develop. Governments have historically tried to address financial frictions by directing credit to ``priority sectors,'' especially manufacturing. A new dataset reveals that the liberalization of directed credit policies is associated with a reallocation of credit to real estate. Further, we document that manufacturing credit predicts higher long-run growth, while real estate credit predicts lower growth, consistent with theories emphasizing growth-enhancing externalities of manufacturing. Our findings highlight the role of financial frictions and government policy in shaping credit allocation, structural change, and growth.Opening the Brown Box: Production Responses to Environmental Regulation
Abstract
We study production responses to emission capping regulation on manufacturing firms. We find that firms reduced their pollution as they transitioned from self-generated to externally sourced electricity, shifted toward producing less coal-intensive products, and increased their abatement expenditures. Firms preserved profitability by increasing their production of higher-margin products. However, firms in highly polluting industries produced fewer products. In the aggregate, we document lower product variety, higher markups, an altered firm-size distribution, and lower business formation. Our findings highlight both the mechanisms behind how mandated pollution reduction can be effective and its costs, suggesting a loss in agglomeration externalities.Discussant(s)
Gautam Rao
,
University of California-Berkeley
Raissa Fabregas
,
University of Texas-Austin
Kristina Manysheva
,
Columbia University
Sumudu Watugala
,
Indiana University
JEL Classifications
- G0 - General