The main question that motivates my PhD thesis is how economic activity in developing countries is influenced by and, in turn, affects the environment. Since these interactions can take many forms, I investigate this issue from three different angles, which necessitates both the usage of novel remote-sensing-based datasets and the development of a new theoretical framework. Firstly, the environment can have a direct impact on economic development, the most obvious example being natural disasters like cyclones. As the incidence and intensity of these events will increase with climate change, it is crucial to estimate their short- and long-run costs and the behavioural response of producers to these large and mostly uninsured aggregate shocks. I have, thus, created a new digital database of cyclone exposure for India to estimate how farmers smooth income in the aftermath of these events. The causality can also run the other way, as economic agents disrupt the environment. A case in point is deforestation, which is analysed in the co-authored second chapter of my thesis. In particular, we use satellite data to study how political decentralisation has affected district-level logging rates in Indonesia. Possible mechanisms include local election cycles, the move from monopoly to oligopoly or the need to raise revenue in the absence of other natural resources. Finally, the third chapter assesses to what extent the environment can create preconditions for socioeconomic interaction. More specifically, I analyse how the introduction of heterogeneous space into the standard urban Muth-Mills model generates a residential equilibrium where the formal and informal housing markets coexist. This new setup is then used to evaluate the usual policy prescriptions for slums and demonstrates that new insights can be gained by adding the spatial component. This thesis, therefore, explores possible links between the environment and economic development and illustrates the advantages of using methods and data sources from other disciplines.

The subject of this thesis is to explore the interaction between the political setting, and stabilisation and reform outcomes in emerging economies. It is motivated by the observation that during the last decades numerous governments in emerging economies have made major efforts to achieve macro-economic stability and advances in economic reforms; necessary changes in economic policy, however, frequently created strong political opposition from those particular interests that stood to lose from them, and thus often failed to be implemented. This thesis contributes to the study of the most important questions in this context, namely why and how countries slide down the path to macro-economic chaos, and under which conditions attempts to reverse the economic free-fall will be successfully pursued. Moreover, which are the reforms needed to improve the situation fundamentally, and how they can be successfully implemented given the political constraints. More specifically it studies the structural reasons leading to high inflation, and the requirements to achieve sustainable price stability. It then turns to major areas of economic reform, namely privatisation and improved governance. It studies how the political setting influences privatisation outcomes, and shows that press freedom is an important tool in fighting corruption, and thus in improving governance. It finally takes a concrete example, namely Russian regions, to study the impact of differences in the political setting and reform efforts, as well as other structural variables, on the economic outcomes.

Identifying the effects of the financial sector on economic growth and business cycles fluctuations has been one the main debates in economics during the last decades. While a lot of progress has been done, we are still far from fully understanding the channels linking the financial sector with the rest of the economy. In the first chapter I focus on the relation between financial development and economic growth. I obtain a measure of the impact of financial development on output from a dynamic general equilibrium model with a productive financial sector. The model predicts that having access to a better financial technology reduces the cost of credit and increases the net return of investment, generating positive and sizeable effects on output. The benefits from a better financial technology are maximized when it is used to invest in ex-ante riskier, but more profitable, investment projects. In the following two chapters I focus on the relation between the performance of the financial sector and business cycle fluctuations. First, I study the impact of credit standards policies. The model used is able to replicate the countercyclical pattern of credit standards documented by the literature. The increase in the probability of default during expansionary periods reduces the efficiency with which investment is transformed into capital. In addition, the increase in the default rate reduces the return of savings, which in turn reduces the labor supply. Second, I study the effects of the financial sector to the economy through the collateral channel for the case of Spain. I find that loosing monetary policy autonomy is of first order importance to cushion risk premium shocks, while this is not the case for housing demand shocks. In addition, labor market rigidities provide stronger amplification effects to all type of shocks than financial frictions do.

The concept of sustainable development came into prominence in the early 80s and gradually found its way into a multilateral instrument in the early 90s in the form of Agenda 21 - Rio Declarations. In very simple terms, the concept deals with addressing the exploitation and production of naturally endowed resources in a fashion that the current generation utilizes equitably, while a sufficient proportion is left for the use of generations unborn. This concept has a particularly fundamental significance in developing countries such as Nigeria which occupies a very prominent 6th position as the world's largest oil producer in addition to being 10th in terms of gas reserves globally. The aim of this study is to examine the significance of this concept within the context of Nigeria, its resources and the Resource Producing Communities, particularly, the Niger Delta Region. The study comes up with very interesting findings and conclusions. First, Nigeria's underdevelopment places it in a different position to effectively apply the concept of sustainable development. Importantly, it will take an overhaul of the present legal and regulatory framework within Nigeria to introduce the principles of values of this important concept.

This thesis presents three papers that to contribute to our theoretical knowledge on economic growth and secular stagnation. Chapter 2 (which constituted my Job Market paper) presents a theory in which economic development manifests itself primarily as a process of sectoral differentiation. As the variety of sectors expands, the allocation of heterogeneously talented individuals improves. The paper shows that, in addition to increasing the average productivity of the matches between agents and sectors, this process also mitigates informational frictions affecting the functioning of financial markets. The positive impact of sectoral variety on the efficiency of financial markets gives rise to a novel feedback between financial development and horizontal innovations, which may yield different types of dynamics. A successful economy typically exhibits a continuous increase in the variety of productive activities, which in turn leads to lower frictions in the financial markets. However, a poverty-trap may also arise. This situation is characterised by a rudimentary productive structure with poor matching of skills to activities, and where the operation of financial markets is severely affected by the talent mismatching. Chapter 3 proposes a theory of insurance market imperfections along the path of development based on the endogenous emergence of informational asymmetries during development. The source of the in efficiency in the insurance market is private information regarding entrepreneurial skills. Development is driven by the action of the entrepreneurs, and materialises when the agents best suited for under taking entrepreneurial activities fully exercise their skills. Yet, due to private information, an adverse selection problem endogenously arises when the prospective entrepreneurs intend to diversify away their idiosyncratic risks. The adverse selection problem prevents the provision of first-best insurance contracts against entrepreneurial risks, which may discourage entrepreneurial investment and halt, the process of development. Chapter 4 (written in collaboration with Vincenzo Merella, from Birkbeck College) turns the attention towards a world economy. The past literature on trade has explored conditions under which international trade might be a factor magnifying income disparities between the advanced North and the backward South. No attention has yet been placed on the effect of trade on countries that do not display substantial dissimilarities concerning capital endowments and income per head. The paper shows that even when no single country is technologically more advanced than any other one and productivity changes are uniform and identical in all countries, international trade may still be the source of income divergence. Divergence will be experienced when comparative advantages induce patterns of specialisation that, although optimal for each country at some initial point in time, do not offer the same scope for improvements in terms of subsequent quality upgrading of final products.

Sustainable development is one of the most important international policy agendas of the 21st Century and involves the development of policies that integrate environmental and development issues with those that are central to poverty and social inequalities. While it is imperative that the policymaking process begins at the local level, there is uncertainty surrounding its implementation. 'Going for Green' was the UK Government's approach to achieving sustainable development at the local level. This thesis has developed a model research process to evaluate how the initiative's Pilot Sustainable Communities Project was implemented within two comparative project areas in Merthyr Tydfil (South Wales). The case study was selected as a research framework, combining quantitative and qualitative research methods. To assist in the collection of empirical data and respond to changes during the initiative's implementation, the research process was divided into three interrelated phases (exploratory, process monitoring and explanatory). An analysis was made of the scope, stage, significance and level of participation, and also how the 'local' community was defined. Empirical data was organised using a case study database and analysed at three different levels: initial preparatory work, a general analytic strategy and the use of analytic techniques. Research findings have indicated that there is a need for sustainability to be locally defined, and reflect how the environment is perceived and understood. Encouraging participation amongst a broad range of community stakeholders requires the development of different approaches based on local identities. Understanding recent social and cultural changes that have occurred within a particular locality can assist in their identification. The thesis concludes that community studies are important in developing and evaluating initiatives that promote sustainable development at the local level. As a research approach they provide an understanding of how communities operate and identify ways of involving them more effectively.

No description available.

The experience of many developing countries suggests that fast economic growth was not accompanied by the alleviation of abject poverty or by the creation of a proportional increase in gainful employment. Because of the wide disparity between the growth of output and the growth in employment some are questioning the wisdom of the past practice of treating growth per se as a central objective of economic policy. Instead of concentrating on growth alone, they are advocating that growth has to be sacrificed for a better distribution and a wider provision of gainful employment. Others see no apparent conflict between output growth on the one hand and distribution and employment on the other. To them, growth is a necessary condition for better distribution and employment. Instead of arresting development (growth) at its early stages for distributional purposes, they believe, by and large, that growth should proceed unabated and distributional issues should not be directly addressed at the possible expense of growth until and unless the national-cake is big enough to warrant, in their opinion, a high enough priority for equity considerations. In this view, to be excessively concerned now about distribution of income and deliberate creation of employment by direct governmental action is to redistribute poverty and not material well being.

No description available.

No description available.