Standard economic theory suggests that capital should flow from rich countries to poor countries. However, capital has predominantly flowed to rich countries. The three essays in this dissertation attempt to explain this phenomenon. The first two essays suggest theoretical explanations for why capital has not flowed to the poor countries. The third essay empirically tests the theoretical explanations. The first essay examines the effects of increasing returns to scale on international lending and borrowing with moral hazard. Introducing increasing returns in a two-country general equilibrium model yields possible multiple equilibria and helps explain the possibility of capital flows from a poor to a rich country. I find that a borrowing country may need to borrow sufficient amounts internationally to reach a minimum investment threshold in order to invest domestically. The second essay examines how a poor country may invest in sectors with low productivity because of sovereign risk, and how collateral differences across sectors may exacerbate the problem. I model sovereign borrowing with a two-sector economy: one sector with increasing returns to scale (IRS) and one sector with diminishing returns to scale (DRS). Countries with incomes below a threshold will only invest in the DRS sector, and countries with incomes above a threshold will invest mostly in the IRS sector. The results help explain the existence of a bimodal world income distribution. The third essay empirically tests the explanations for why capital has not flowed from the rich to the poor countries, with a focus on institutions and initial capital. I find that institutional variables are a very important factor, but in contrast to other studies, I show that institutions do not account for the Lucas Paradox. Evidence of increasing returns still exists, even when controlling for institutions and other variables. In addition, I find that the determinants of capital flows may depend on whether a country is rich or poor.

The paper presents a formal analysis which incorporates returns to transportation into a Ricardian framework to predict trade patterns. The important point to be gained from this analysis is that increasing returns to transportation, coupled with appropriate distances between trading partners can be shown to reverse Ricardian predictions even when there are no international differences in tastes, technology, or factor endowments. Additional gains from trade may emerge from reductions in aggregate delivery costs owing to scale economies. (authors' abstract) / Series: Discussion Papers of the Institute for Economic Geography and GIScience

Doctor of Philosophy / Department of Economics / William F. Blankenau / This dissertation investigates two essential features of the US economy. First, it explores how news about future productivity changes business cycle fluctuations. Using the a representative agent model, it shows that implementation labor in workplace organization could be an important channel through which news about the fundamentals can realistically generate US business cycle fluctuations. Further this idea is extended using the perspective of sunspot fluctuations. In particular, the model can lead to multiple equilibria under specific parameterizations. Second, a general equilibrium model has been developed with heterogeneous agents to explain the wage polarization feature of the US labor market, particularly how the price of an important technology is connected to lifetime earnings of agents and affects their college decisions. The following summarizes the three chapters of my dissertation. The first chapter which I co-authored with Dr. Blankenau, argues that purchasing investment goods does not directly increase the productive capacity of a business. Changes in the business through the installation of capital, worker training, and workplace reorganization are often required. These changes themselves are not easily automated. Change requires workers. We build a model where investment requires a complementary labor input. This mechanism is embedded in a representative agent model with capacity utilization, adjustment costs, and separable preferences. We show that this environment can yield positive co-movement between consumption, investment, and labor hours when the economy experiences a news shock about future productivity, thus providing an additional channel through which news shocks can generate key business cycle features. The second chapter is an extension of the first chapter. I investigate the indeterminacy in a representative agent model with implementation labor and increasing returns in production. First, my analysis shows that a representative agent with implementation labor can exhibit increasing returns to scale. Then I show that self-fulfilling beliefs of agents lead to business cycle fluctuations in which multiple equilibria can arise under specific parameterizations. Specifically, implementation labor in the production of capital is the highly important, necessary condition for the self-fulling equilibrium outcome. The third chapter, which is also a joint work with Dr. Blankenau, discusses the wage polarization feature of the US labor market. We build a general equilibrium model with heterogeneous agents, showing how wage polarization can emerge when the price of computer capital falls. Consequently, we find the share of the population with a college degree decreases. Our findings are consistent with recent empirical data that show a U-shaped wage growth pattern in the US as well as a slower growth rate of college-educated workers despite the high returns of investing in education. In the model, we assume that each agent is born with a portfolio of skills. Specifically, each agent can provide manual labor, routine labor, and abstract labor and must decide how much of each to provide. An agent can increase efficiency in all types of labor by attending college. All three types of labor are valued in the labor market at an endogenously determined wage rate. Computer capital is a substitute for routine labor. As its price falls and its quantity increases, agents with a relative aptitude for routine labor no longer find it advantageous to attend college. Since routinization of tasks harms middle-income agents, the model has government policy implications for observed wage polarization.

Legalization of Abortion in Argentina: A Path-Dependency Reading of the Influence of the Catholic Church and the Contrast with the Uruguayan Experience Alexa Elleny Quiles Hernández Abstract Argentina's abortion laws only allow women to access a lawful procedure in cases of rape and health or life threat, and this has been driving women who do not wish to continue a pregnancy into criminal considerations and, in many cases, dangerous and unhygienic environments. The aim of this work is to delineate part of the historical path that has forged the strong relations between the Argentinean State and the Catholic Church since the colonial period and the influence this has had on restrictive abortion rights for women today despite the growing number of demands to legalize voluntary termination. To highlight this influence, this study contrasts the Argentinean experience with that of neighboring Uruguay, a country that successfully legalized abortion in 2012 and which drew an effective division between the Church and the State at an early stage, furnishing a more autonomous environment for the government to respond to citizens' needs. For this, this work takes on Paul Pierson's approach to increasing returns and path- dependency theory and researches and analyzes events, dynamics and factors that have paved...

<p>This study deals with Swedish nuclear-energy politics from 1980 to 2006. The purpose is to trace and to explain change and stability in three political parties’ rhetoric concerning the phase-out of Swedish nuclear-energy and the Swedish government’s nuclear politics. Two hypotheses based on path dependency theory are tested to analyze if rhetoric and politics are developing in separate directions. The first hypothesis is based on the idea that earlier promises from the political parties affect what promises they can make later on. The second hypothesis is based on the idea that early investments in Swedish nuclear energy will affect what investments can be made at a later stage. The study shows that there are differences between the political parties’ promises and the government’s politics in the Swedish nuclear-energy debate. The two tested hypotheses seem to be possible explanations to why differences between party rhetoric and governmental politics have appeared. While party rhetoric is formed by a need to earn credibility by showing continuity in made promises, governmental politics is formed by a need to find practical solutions to welfare-, economic- and environmental problems.</p>

Magister Commercii - MCom / Nearly half a century after independence, the Cameroon economy has experienced little or no growth in per capita incomes in spite of the enormous natural and human potentials of the country and in spite of the huge packages of aid and subsequent debt relief received from the international donor community, suggesting a more profound cause to the development problems facing the country. Under the current WTO rules-based system of multi-lateral trade management, Cameroon, like other poor countries, is left with limited scope for effective implementation of industrial and trade policies that could bail her out of her present predicament. Against this backdrop, this study seeks to explore the fundamental determinants of sustainable growth within the context of the Cameroonian economy. While acknowledging the role of openness to international markets in promoting growth, its effects could only be maximised with the attainment of certain threshold conditions such as the availability of basic skills, provision of vital infrastructure services and public goods, and good governance. In a nutshell, for development to happen, the country needs not only well functioning markets, but also good governments that do not steal the fruits of workers' labour. Drawing on the endogenous growth models, the study suggests that incentives for investment in knowledge capital, for infrastructure provision and for good governance could bail the country out of its low level traps, setting it on the path of sustainable growth in an evermore globalising world economy.

This study deals with Swedish nuclear-energy politics from 1980 to 2006. The purpose is to trace and to explain change and stability in three political parties’ rhetoric concerning the phase-out of Swedish nuclear-energy and the Swedish government’s nuclear politics. Two hypotheses based on path dependency theory are tested to analyze if rhetoric and politics are developing in separate directions. The first hypothesis is based on the idea that earlier promises from the political parties affect what promises they can make later on. The second hypothesis is based on the idea that early investments in Swedish nuclear energy will affect what investments can be made at a later stage. The study shows that there are differences between the political parties’ promises and the government’s politics in the Swedish nuclear-energy debate. The two tested hypotheses seem to be possible explanations to why differences between party rhetoric and governmental politics have appeared. While party rhetoric is formed by a need to earn credibility by showing continuity in made promises, governmental politics is formed by a need to find practical solutions to welfare-, economic- and environmental problems.

Cette thèse a pour objectif d’étudier la façon dont les économistes ont théorisé la relation entre science, technologie et croissance économique des années cinquante à aujourd’hui. Nous identifions deux approches des liens entre science, technologie et croissance : une approche « néoclassique » et une approche « évolutionniste ». L’approche « néoclassique » considère les progrès scientifiques et technologiques comme exogènes aux processus économiques et analyse les processus de croissance comme étant soumis à des rendements constants. L’approche « évolutionniste » défend quant à elle une représentation interactionniste des liens entre science et technologie, considère les progrès technologiques et scientifiques comme étant endogènes aux processus économiques et analyse les processus de croissance comme étant soumis à des rendements croissants. Nous analysons l’émergence de ces deux approches dans les années cinquante et soixante et expliquons leur opposition avec une domination de l’approche « néoclassique » jusque dans les années quatre-vingt (Partie 1). Nous montrons ensuite que l’approche « évolutionniste » devient dominante à partir des années quatre-vingt (Partie 2). / The aim of this thesis is to examine the way economists theorized the links between science, technology, and economic growth in the post-war era. We identify two approaches of the links between science, technology, and economic growth : a “neoclassical” approach and an “evolutionary” approach. The “neoclassical” approach considers scientific and technological progress as exogenous to economic processes and makes the hypothesis of constant returns to scale. The “evolutionary” approach defends an interactive representation of the links between science and technology, considers scientific and technological progress as endogenous to economic processes, and makes the hypothesis of increasing returns to scale. We study the development of the two approaches in the fifties and sixties, and explain their opposition and the dominance of the “neoclassical” approach up to the eighties (Part 1). We then show that the “evolutionary” approach has been the most influential since the eighties (Part 2).