Pushing a Troika of Development: Promoting Investment, Curbing Corruption, and Enhancing Public Good Provision

Abstract

In recent decades, a new direction of development economics has emerged, led by economists on a mission to improve the quality of life for citizens of developing countries through proven, cost-effective interventions. This micro-economic focus on development hinges on identifying barriers to growth and implementing targeted programs designed to alleviate these constraints. However, identifying constraints is far easier than measuring their magnitude, and designing effective measures to quantify these barriers remains a substantial challenge. Numerous microeconomic indicators of development are famously intractable and resist simple methods of accurate measurement. This dissertation tackles measurement challenges by quantifying three major development drivers: efficient investment, effective institutions, and public good provision. Using three case studies on business development and cooperation conducted in Russia and Kenya, I develop novel ways to quantify constraints and suggest methods to alleviate them. In the first chapter, I estimate marginal rates of return to capital for small retail firms, evaluate the causes of inefficiency and examine interventions that may aid growth. Next, I examine corruption as a barrier to small business growth and assess whether policy reform is capable of decreasing corrupt activity. Finally, I investigate the causes of heterogeneity in the financing of local public goods and experimentally document the conditions that improve communities’ ability to cooperate and coordinate on efficient Nash equilibria. In sum, I propose new ways of measuring marginal rates of return to capital, corruption incidence, and cooperation in public good provision; then leverage these measures to shed light on barriers to growth and to assess the effectiveness of possible interventions to enable development and achieve more efficient resource distribution.