Pablo Selaya

Aid and Sectoral Growth: Evidence from Panel Data

Abstract This article examines empirically the proposition that aid to poor countries is detrimental for external competitiveness, giving rise to Dutch disease type effects. At the aggregate level, aid is found to have a positive effect on growth. A sectoral decomposition shows that the effect is (i) significant and positive in the tradable and the nontradable sectors, and (ii) equally strong in both sectors. The article thus provides no empirical support for the hypothesis that aid reduces external competitiveness in developing countries. A possible reason for this finding is the existence of large idle labour capacity that prevents the real exchange rate from appreciating.

Eye Disease and Development

This research advances the hypothesis that cross-country variation in the historical incidence of eye disease has influenced the current global distribution of per capita income. The theory is that pervasive eye disease diminished the incentive to accumulate skills, thereby delaying the fertility transition and the take-off to sustained economic growth. In order to estimate the influence from eye disease incidence empirically, we draw on an important fact from the field of epidemiology: Exposure to solar ultraviolet B radiation (UVB-R) is an underlying determinant of several forms of eye disease; the most important being cataract, which is currently the leading cause of blindness worldwide. Using a satellite-based measure of UVB-R, we document that societies more exposed to UVB-R are poorer and underwent the fertility transition with a significant delay compared to the forerunners. These findings are robust to the inclusion of an extensive set of climate and geography controls. Moreover, using a global data set on economic activity for all terrestrial grid cells we show that the link between UVB-R and economic development survives the inclusion of country fixed effect.

Lightning, IT Diffusion and Economic Growth Across US States

Empirically, a higher frequency of lightning strikes is associated with slower growth in labor productivity across the 48 contiguous US states after 1990; before 1990 there is no correlation between growth and lightning. Other climate variables (e.g., temperature, rainfall and tornadoes) do not conform to this pattern. A viable explanation is that lightning influences IT diffusion. By causing voltage spikes and dips, a higher frequency of ground strikes leads to damaged digital equipment and thus higher IT user costs. Accordingly, the flash density (strikes per square km per year) should adversely affect the speed of IT diffusion. We find that lightning indeed seems to have slowed IT diffusion, conditional on standard controls. Hence, an increasing macroeconomic sensitivity to lightning may be due to the increasing importance of digital technologies for the growth process.

On the Impact of Digital Technologies on Corruption: Evidence from U.S. States and Across Countries

We hypothesize that the spread of the Internet has reduced corruption, chiefly through two mechanisms. First, the Internet facilitates the dissemination of information about corrupt behavior, which raises the detection risks to shady bureaucrats and politicians. Second, the Internet has reduced the interface between bureaucrats and the public. Using cross-country data and data for the U.S. states, we test this hypothesis. Data spans the period during which the Internet has been in operation. In order to address the potential endogeneity problem, we develop a novel identification strategy for Internet diffusion. Digital equipment is highly sensitive to power disruption: it leads to equipment failure and damage. Even very short disruptions (less than 1/60th of a second) can have such consequences. Accordingly, more frequent power failures will increase the user cost of IT capital; either directly, through depreciation, or indirectly, through the costs of protective devises. Ceteris paribus, we expect that higher IT user costs will lower the speed of Internet diffusion. A natural phenomenon which causes a major part of annual power disruptions globally is lightning activity. Lightning therefore provides exogenous variation in the user cost of IT capital. Based on global satellite data from the U.S. National Aeronautics and Space Administration (NASA), we construct lightning density data for a large cross section of countries and for the U.S. states. We demonstrate that the lightning density variable is a strong instrument for changes in Internet penetration; and we proceed to show that the spread of the Internet has reduced the extent of corruption across the globe and across the U.S. The size of the impact is economically and statistically significant.