Publications and Accepted Papers
Technology Adoption and Productivity Growth: Evidence from Industrialization in France
with Mara P. Squicciarini and Nico Voigtländer
Accepted at the Journal of Political Economy
Coverage: VoxEU, UCLA Anderson Review.
New technologies tend to be adopted slowly and – even after being adopted – take time to be reflected in higher aggregate productivity. One prominent explanation for these patterns is the need to reorganize production, which often goes hand-in-hand with major technological breakthroughs. We study a unique setting that allows us to examine the empirical relevance of this explanation: the adoption of mechanized cotton spinning during the First Industrial Revolution in France. The new technology required reorganizing production by moving workers from their homes to the newly-formed factories. Using a novel hand-collected plant-level dataset from French archival sources, we show that productivity growth in mechanized cotton spinning was driven by the disappearance of plants in the lower tail – in contrast to other sectors that did not need to reorganize when new technologies were introduced. We provide evidence that this was driven by the need to learn about optimal ways of organizing production. This process of `trial and error' led to initially low and widely dispersed productivity, and – in the subsequent decades – to high productivity growth as knowledge diffused through the economy and new entrants adopted improved methods of organizing production.
The New Economics of Industrial Policy
with Nathan Lane and Dani Rodrik
Accepted at the Annual Review of Economics
Coverage: Project Syndicate, New York Times, Foreign Policy, VoxEU.
We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of de-industrialization.
Industrial Policy and the Great Divergence
with Claudia Steinwender
Accepted at the Annual Review of Economics
Coverage: ProMarket, APuZ (in German).
We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of de-industrialization.
Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade
Online Appendix
American Economic Review, 108 (11): 3339-76
Awarded FREIT-EIIT Best Graduate Paper Prize, 2014
Coverage: Trade Talks, AEA Research Highlights, VoxEU, CentrePiece, Bloomberg, pseudoerasmus.com, Defacto (in Hungarian), El Pais (in Spanish).
We discuss recent work evaluating the role of the government in shaping the economy during the long 19th century, a practice we refer to as industrial policy. We show that states deployed a vast variety of different policies aimed at, primarily, but not exclusively, fostering industrialization. We discuss the thin, but growing literature that evaluates the economic effects of these policies. We highlight some fruitful avenues for future study.
Working Papers
The Who, What, When, and How of Industrial Policy: A Text-Based Approach
with Nathan Lane, Emily Oehlsen and Verónica C. Pérez
Data update July 2023
Coverage: Wall Street Journal, Bloomberg, UNIDO 1, UNIDO 2, JP Morgan, STEG Podcast, RES.
Although questions surrounding industrial policy are fundamental, we lack both measures and comprehensive data on industrial policy. Consequently, scholars and practitioners lack a systematic picture of industrial policy practice. This paper provides a new, text-based approach to measuring industrial policy. We take the tools of supervised machine learning to a comprehensive, English-language database of economic policy to construct measures of industrial policy at the country, industry, and year level. We use this data to establish four fundamental facts about global industrial policy from 2009 to 2020. First, IP is common (25 percent of policies in our database) and trending upward since 2010. Second, industrial policy is technocratic and granular, taking the form of subsidies and export promotion measures targeted at individual firms, instead of tariffs. Third, the countries engaged most in IP tend to be wealthier (top income quintile) liberal democracies, and IP is very rare among the poorest nations (bottom quintile). Fourth, IP tends to be targeted towards a small share of industries, and targeting is highly correlated with an industry’s revealed comparative advantage. Thus, we find contemporary practice is a far cry from industrial policy’s past, and tends toward selective, export-oriented policies used by the world’s most developed economies.
All aboard: The effects of port development
with César Ducruet, Dávid Krisztián Nagy and Claudia Steinwender
Conditionally accepted at the Journal of International Economics
Coverage: VoxDev
Seaports facilitate the fast flow of goods across space, but ports also entail local costs borne by host cities. We use the introduction of containerized shipping to explore the effects of port development. At the local level, we find that seaport development increases city population by making a city more attractive, but this market access effect is offset by costs which make the city less attractive. At the aggregate level, we find that the local costs associated with port development are heterogeneous across cities and reduce aggregate welfare gains, which however are still positive and substantial.
Spinning the web: Codifiability, Information Frictions and Trade
with Claudia Steinwender
Online Appendix
previously circulated as "Drivers of Fragmented Production Chains: Evidence from the 19th century"
This paper uncovers a novel mechanism through which information frictions matter for trade in differentiated goods; the product specification mechanism. We estimate the effect of a reduction in communication time on imports of three product categories in 19th century cotton textile trade; yarn, plain cloth, and finished cloth. In order to identify causal effects, we use exogenous variation in the ruggedness of the submarine seafloor to predict in which year countries get connected to the global telegraph network. The telegraph dramatically reduced the time it took to exchange information expressed in words, but did not affect the exchange of physical objects such as product samples. Using evidence from cotton traders' communication, we show that the examined three products differed in their codifiability, that is, in the extent to which merchants specified product attributes in words. Empirically, we find that communication time reductions had the largest effect on imports of the most codifiable product; yarn, and the smallest effect on the non-codifiable product, finished cotton cloth. Our results suggest that the effect of ICT on trade and fragmentation of production depends on the technology-specific codifiability of product specifications.
Notes
Away from Home and Back: Coordinating (Remote) Workers in 1800 and 2020
with Mara P. Squicciarini and Nico Voigtländer
Coverage: Financial Times, Behind the News (podcast), Mint, G7 (podcast – in Hungarian), UCLA Anderson Review
We examine the future of remote work by drawing parallels between two contexts: The move from home to factory-based production during the Industrial Revolution and the shift to work from home today. In both cases, new technology induced new working arrangements, and this shift was associated with a similar trade-off in the past as it is today: productivity advantages and cost savings versus organizational barriers such as coordinating workers under the new workplace arrangement. Using contemporary data, we show that the COVID-19 pandemic moved even sectors with high organizational barriers to working from home. Without further technological or organizational innovations, this shift is likely to be reversed, and remote work may not be here to stay just yet.