Three Essays in Economic Growth and Development

Date
2017
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Abstract
In this thesis, I ask four independent but interrelated questions regarding the sources of differences in economic growth and development across countries. Resource reallocation is a key factor in answering all four questions. My first two questions focus on resource reallocation, but in the context of recessions. First, how does capital misallocation move over business cycles? Secondly, what factors account for capital misallocation and its cyclicality? I provide empirical evidence that capital misallocation is countercyclical (i.e. higher during recessions and lower during booms). As for the factors that account for capital misallocation and its cyclicality, I find that net worth explains approximately seven percent of capital misallocation and around 20 percent of its cyclicality. My third question asks whether increased exposure to foreign competition generates more productivity gains from reallocating inputs in economies with a relatively large proportion of young firms. I find this to be the case. Firm age may matter for productivity gains from reallocating inputs for two reasons: 1) young firms are more likely to fail, and 2) those young firms that survive can possibly grow more quickly than older firms, perhaps because it is easier and cheaper for young firms to reallocate inputs. The fourth question asks: Do firms grow at a slower rate in poorer countries than in richer countries? The answer to this question has already been established by Hsieh and Klenow (2014) in their study of three countries. Using a broader collection of countries, I generalize their results, finding that firms do indeed grow at a slower rate in poorer countries than in richer countries.
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Keywords
Economics
Citation
Alam, M. (2017). Three Essays in Economic Growth and Development (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca. doi:10.11575/PRISM/28436