Browsing by Author "Ahlerup, Pelle"

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Are Natural Disasters Good for Economic Growth?
(2013-02) Ahlerup, Pelle; Dept of Economics, University of Gothenburg
Natural disasters plague the populations of many countries, and the international commu- nity often seeks to alleviate the human suffering by means of humanitarian aid. Do natural disasters also have negative effects on aggregate economic growth? This paper shows that natural disasters on average have a positive association with subsequent economic performance. This overall positive association is driven by the experience of democratic developing countries that receive humanitarian aid.
The Causal Effects of Ethnic Diversity: An Instrumental Variables Approach
(2009-10-05T06:02:43Z) Ahlerup, Pelle
Ethnic diversity is endogenous to economic development in the long run. Yet the standard approach in economic research is to treat ethnic diversity as an exogenous factor. By identifying instruments for ethnic diversity, we correct this misspeci ca- tion and establish that ethnic diversity has an exogenous in uence on income levels, economic growth, corruption, and provision of public goods. Earlier results based on OLS estimations may have underestimated the negative e¤ects of high levels of ethnic diversity.
Do the land-poor gain from agricultural investments? Empirical evidence from Zambia using panel data
(2015-08) Ahlerup, Pelle; Tengstam, Sven; Dept. of Economics, University of Gothenburg
In the context of the global land rush, some portray large-scale land acquisitions as a potent threat to the livelihoods of already marginalized rural farming households in Africa. In order to avoid the potential pitfall of studying a particular project that may well have atypical effects, this paper systematically investigates the impact on commercial farm wage incomes for rural smallholder households of all pledged investments in the agricultural sector in Zambia between 1994 and 2007. The results suggest that agricultural investments are associated with a robust moderate positive effect, but only for households with a relative shortage of land.
Drought and Political Trust
(University of Gothenburg, 2023-04) Ahlerup, Pelle; Sundström, Aksel; Jagers, Sverker C; Sjöstedt, Martin; Department of Economics, University of Gothenburg
Droughts can affect people’s political trust positively, through rallying effects, or negatively, through blame attribution. We examine how drought conditions affect political trust in the context of Africa. We link high-precision exogenous climate data to survey respondents, 2002–2018, and report moderate negative effects of drought conditions on people’s trust in their president. These negative effects increase with the severity of drought conditions. The political economy of favoritism, where some regions are preferentially treated by rulers, should result in heterogeneous effects across territories. We find that trust increases in capital regions and in leader birth regions during dry conditions. In contrast, when droughts take place in such regions, trust levels fall in other regions. This is in line with the idea that capital regions and leader birth regions could be preferentially treated in the aftermath of droughts. Understanding these processes further is important given their salience because of global warming.
Drought and Trust
(2023-04) Ahlerup, Pelle; Sundström, Aksel; Jagers, Sverker C.; Sjöstedt, Martin; The Quality of Government Institute
Droughts can affect people’s political trust positively, through rallying effects, or negatively, through blame attribution. We examine how drought conditions affect political trust in the context of Africa. We link high-precision exogenous climate data to survey respondents, 2002–2018, and report moderate negative effects of drought conditions on people’s trust in their president. These negative effects increase with the severity of drought conditions. The political economy of favoritism, where some regions are preferentially treated by rulers, should result in heterogeneous effects across territories. We find that trust increases in capital regions and in leader birth regions during dry conditions. In contrast, when droughts take place in such regions, trust levels fall in other regions. This is in line with the idea that capital regions and leader birth regions could be preferentially treated in the aftermath of droughts. Understanding these processes further is important given their salience because of global warming.
Earthquakes and Civil War
(2009-10-05T06:09:15Z) Ahlerup, Pelle
Natural disasters claim thousands of lives each year and can be a heavy burden for already vulnerable societies. Are natural disasters also a cause of violent con- flict? While most studies based on systematic empirical research do find this to be the case, there are also known cases where natural disasters have contributed to a de-escalation of fighting. This paper shows, theoretically and empirically, that mod- erate earthquakes increase the risk of civil wars, but that stronger (and therefore more rare) earthquakes instead reduce the risk of civil wars. We use an exhaustive dataset on earthquakes from 1947 to 2001 collected by seismologists. The associ- ation between earthquakes and the incidence of civil war is decomposed into two separate effects: they affect the risk that new civil wars are started and they affect the chance that existing civil wars are terminated.
Essays on Conflict, Institutions, and Ethnic Diversity
(2009-10-02T12:57:41Z) Ahlerup, Pelle
Ethno-regional favouritism in Sub-Saharan Africa
(2014-03) Ahlerup, Pelle; Isaksson, Ann-Sofie; Dept. of Economics, University of Gothenburg
Studies of political favouritism in Africa often treat ethnic and regional favouritism as interchangeable concepts. The present paper distinguishes between the two and investigates their relative influence in Sub-Saharan Africa. Focusing on whether individuals perceive their ethnic group to be unfairly treated by government, we assess the importance of being a co-ethnic of the country president, of living in the president’s region of origin and of the regional share of president co-ethnics. Empirical findings drawing on detailed individual level survey data covering more than 19 000 respondents across 15 African countries suggest that ethnic and regional favouritism are not the same, but rather have independent effects.
Foreign aid and structural transformation: Micro-level evidence from Uganda
(2019-03) Ahlerup, Pelle; Department of Economics, University of Gothenburg
History tells us that sustained economic growth, necessary to alleviate poverty in sub-Saharan Africa, requires growth in the fundamentals, such as infrastructure and human capital, but also structural transformation, i.e., a reallocation of labor from low-productivity to high-productivity sectors. I study whether foreign aid is a factor that helps or hinders structural transformation. I use a dataset on aid projects with precise coordinates from all major donors and match it to panel data with extensive information on labor market activities for a large representative sample of individuals in Uganda. I find consistent evidence that foreign aid reverses the process of structural transformation. More specifically, the local short-term effect of foreign aid is that people in areas with ongoing aid projects work more in agriculture and less in non-agricultural sectors. There are no significant effects on wages or household expenditures for people in the agricultural sector, but the effects on people in non-agricultural sectors are negative.
Gold mining and education: a long-run resource curse in Africa?
(2016-06) Ahlerup, Pelle; Baskaran, Thushyanthan; Bigsten, Arne; Dept. of Economics, University of Gothenburg
We provide micro-level evidence on an important channel through which mineral resources may adversely affect development in the long-run: lower educational attainment. Combining Afrobarometer survey data with geocoded data on the discovery and shutdown dates of of gold mines, we show that respondents who had a gold mine within their district when they were in adolescence have significantly lower educational attainment. These results are robust to the omission of individual countries, different definitions of adulthood, the use of alternative data from the Development and Health Surveys (DHS), and buffer-based approaches to define neighborhood. Regarding mechanisms, we conclude that the educational costs of mines are likely due to households making myopic educational decisions when employment in gold mining is an alternative. We explore and rule out competing mechanism such as endogenous migration, a lower provision of public goods by the government, and a higher propensity for violent conflicts in gold mining districts.
Nationalism and Government Effectiveness
(2008-09-02T11:16:03Z) Ahlerup, Pelle; Hansson, Gustav
The literature on nation-building and nationalism suggests that nation-building affects economic and political performance, mitigates the problems associated with ethnic hetero- geneity, but that nationalism, an indicator of successful nation-building, is linked to dismal performance via protectionism and intolerance. This paper shows that there is a nonlinear association between nationalism and government effectiveness, that nationalism leaves no imprint on the effects of ethnic heterogeneity but may be a positive force in former colonies, and that actual trade ows are independent of the level of nationalism in the population.
Natural Disasters and Government Turnover
(2013-02) Ahlerup, Pelle; Dept of Economics, University of Gothenburg
Natural disasters have been linked to both violent conflict and, in some settings, poor economic growth, but do they also drive government parties out of office? We study government turnover in a global sample of more than 200 elections to the executive. Natural disasters are associated with more frequent turnover, but not in highly democratic countries. The effect of geophysical disasters is especially strong, and even stronger when endogeneity is addressed.
The Roots of Ethnic Diversity
(2007-12-14T07:52:55Z) Ahlerup, Pelle; Olsson, Ola
The level of ethnic diversity is believed to have significant consequences for economic and political development within countries. In this article, we provide a theoretical and empirical analysis of the determinants of ethnic diversity in the world. We introduce a model of cultural and ge- netic drift where new ethnic groups endogenously emerge among periph- eral populations as a response to an insufficient supply of public goods. In line with our model, we find that the duration of human settlements has a strong positive association with ethnic diversity. Ethnic diversity decreases with the length of modern state experience and with distance from the equator. Both "primordial" and "constructivist" hypotheses of ethnic fractionalization thus receive some support by our analysis.
Social Capital vs Institutions in the Growth Process
(2007-03-08T14:03:07Z) Ahlerup, Pelle; Olsson, Ola; Yanagizawa, David
Is social capital always important for economic growth? A number of recent micro studies suggest that interpersonal trust and social capital will have its greatest impact on economic performance when court institutions are relatively weak. The conventional wisdom from macro studies, however, is that social capital is unconditionally good for growth. On the basis of the micro evidence, we outline an investment game between a producer and a lender in an incomplete-contracts setting. A key insight is that social capital will have the greatest e¤ect on the total surplus from the game at lower levels of institutional strength and that the effect of social capital vanishes when institutions are very strong. When we bring this prediction to an empirical cross-country growth regression, it is shown that the marginal e¤ect of social capital (in the form of inter- personal trust) decreases with institutional strength. Our results imply that a one standard deviation rise in social capital in weakly institutionalized Nigeria should increase economic growth by 1.8 percentage points, whereas the same increase in social capital only increases growth by 0.3 percentage points in strongly institutionalized Canada.
Sustainable Economic Growth: A Critical Assessment of SDG 8.1
(University of Gothenburg, 2023-04) Ahlerup, Pelle; Olsson, Ola; Department of Economics, University of Gothenburg
In this report, we focus on the Sustainable Development Goal (SDG) target 8.1, stipulating that countries should pursue real GDP per capita growth rates that are in accordance with their national circumstances and that total GDP should grow by more than seven percent a year in the least developed countries. We start by briefly discussing the background of this target and then review some of the existing research on economic growth across the world, starting with growth theory and its predictions concerning the convergence of growth rates and income levels in the short and long term. We also review the extensive empirical work on cross-country income and growth regressions that have accumulated during the last three decades, focusing on recent (pre-covid) and historical patterns regarding the fulfillment of the SDG 8.1 targets. We show that a growth rate in total GDP of seven percent per year has only been observed in about 10 percent of all available country-year observations over history. Growth rates exceeding seven percent were relatively frequent among poor countries during 2000-2009 but not during 2009-2019. Since 2000, the relatively high average growth rates among poor countries have implied that their income levels have steadily converged towards those of richer countries, although at a slow pace. This pattern is manifested in longer periods of sustained growth episodes in poor countries and can probably be explained by successful policy reforms. We also show that about a third of all countries managed to have positive economic growth during 2010-19 while at the same time decreasing their emissions of CO2 from production (decoupling). For poor and rich countries alike, the growth prospects post-covid and after Russia’s invasion of Ukraine, are uncertain.