PhD defence M. (Megan) Haasbroek

Below is a brief summary of the dissertation:

Many countries that opened up to international trade over the past thirty years have seen overall economic growth, but also a rise in inequality. There is increasing evidence that these unequal outcomes can partly be explained by market failures, or inefficient (re)allocation of resources. In my dissertation, I focus on three sources of market failures that are common in low- and middle-income countries, and explore how they affect the consequences of trade and industrial policies. First, I look at how companies can overcome challenges in finding trading partners through middlemen, and how this affects the benefits of trade liberalization. Second, I examine how domestic transport costs affect the regional benefits from trade, finding that lowering import tariffs does not markedly affect employment in areas with poor international connections. Finally, I investigate how compulsory land acquisition, or governments taking private land for public use, influences the outcomes of industrial policy aimed at growing export-focused manufacturing. I find that banning compulsory acquisition led to fewer new entrants into manufacturing but more industrial jobs. In each case, market failures influence how much businesses are exposed to policies; understanding the impact of market failures is thus of great importance for inclusive and effective policymaking.