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Infrastructure and structural transformation: evidence from Ethiopia

Moneke, Niclas (2020) Infrastructure and structural transformation: evidence from Ethiopia. PhD thesis, The London School of Economics and Political Science (LSE).

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Identification Number: 10.21953/lse.00004187

Abstract

Roads are instrumental to market access. Electricity is a key technology for modern production. Both have been widely studied in isolation. In reality, infrastructure investments are commonly bundled. How such big push infrastructure investments interact in causing economic development, however, is not well understood. To this end, I first develop a spatial general equilibrium model to understand how big push infrastructure investments may differ from isolated investments. Second, I track the large-scale road and electricity network expansions in Ethiopia over the last two decades and present causal reduced-form evidence confirming markedly different patterns: access to an all-weather road alone increases services employment, at the expense of manufacturing. In contrast, additionally electrified locations see large reversals in the manufacturing employment shares. Third, I leverage the model to structurally estimate the implied welfare effects of big push infrastructure investments. I find welfare in Ethiopia increased by at least 11% compared to no investments, while isolated counterfactual road (electrification) investments would have increased welfare by only 2% (0.7%).

Item Type: Thesis (PhD)
Additional Information: © 2020 Niclas Moneke
Library of Congress subject classification: H Social Sciences > HN Social history and conditions. Social problems. Social reform
Sets: Departments > Economics
Supervisor: Sturm, Daniel and Burgess, Robin
URI: http://etheses.lse.ac.uk/id/eprint/4187

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