Essays on the Political Economy of Development

Abstract

In this dissertation, I present three essays on the connections between economic outcomes and political behavior in developing countries. In Chapter 1, I evaluate how autocrats alter their distributive strategies in response to economic shocks. I introduce a model of redistribution and regime stability that shows how in-group favors can be a strategic response to economic downturns. The model predicts that, as economic shocks worsen, autocrats may favor their supporters and confront opposition protests to save on appeasement costs. I test the model's main results in two empirical settings. First, I focus on the Venezuelan blackouts of 2019. Consistent with the model, the Maduro regime was more likely to exempt regime-supporting regions affected by the blackout from later power rationing. Moreover, blackout-induced protests were limited to opposition-leaning regions. I then focus on negative rainfall shocks in Sub-Saharan Africa. Droughts magnify differences in development, protests and state-coercion outcomes in favor of leaders' home regions. Chapter 2 documents how violence resulting from the Mexican Drug War hindered local export growth. Focusing on exports allows us to abstract from foreign demand factors and measure effects on the local capacity to supply foreign markets. We compare exports of the same product to the same country, but facing differential exposure to violence after a close electoral outcome. Firms exogenously exposed to the Drug War experienced lower export growth. Violence eroded capital investment, disproportionately hampering large exporters and capital-intensive activities. Chapter 3 evaluates whether economic gains from globalization erode support for economic nationalism. We study how NAFTA-enhanced local access to US-markets affected Mexican demands for protectionist platforms. The left -led by Andrés Manuel López Obrador (AMLO)- under-performed in cities benefiting from export access gains during the 2006 presidential elections. This effect is observed strictly in 2006 -the only post-NAFTA election in which debates over trade integration played a salient role. Our findings are robust to controls for import competing pressures from NAFTA and the China Shock. AMLO's 2006 protectionist platform likely cost him that year's election, and campaign media strategies in 2012 seem to respond to this earlier backlash.