Can Big Push Infrastructure Unlock Development? Evidence from Ethiopia
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%).

Link to paper: niclasmoneke.com/wp-content/uploads/Moneke-JMP-Big_Push_Infrastructure.pdf
Date: 23 January 2020, 13:00 (Thursday, 1st week, Hilary 2020)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room C
Speaker: Niclas Moneke (London School of Economics)
Organising department: Department of Economics
Part of: Department of Economics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark