| This dissertation explores how local circumstances affect local economic growth in India. The first chapter asks whether local politicians influence local economic growth. Using a regression discontinuity design, an economic census, and monthly stock prices, I find that economic outcomes are particularly poor in constituencies that were narrowly lost by the party in control of government resources. Using international survey data to classify industries by their dependence on government officials, I argue that this effect is driven by political control over the bureaucracy. The second chapter examines how natural resource wealth affects the local economy. Combining data on mineral deposits, global mineral prices and local economic activity, I am able to isolate the direct effect of natural resource wealth. In the cross-section, towns in resource rich areas are smaller, with larger mining sectors and smaller manufacturing and retail sectors. The causal time series results suggest that these effects may be due to unobserved aspects of natural advantage. Resource booms result in broad-based growth in towns up to 50km from the nearest mineral deposit. Rural areas are affected at a smaller radius, with growth in agroprocessing, but a decline in service sectors, suggesting a reallocation of both labor and government inputs toward mineral extraction. In the third chapter, I evaluate the economic impact of rural roads, focusing on a large scale road building program undertaken by the Indian government between 2000 and 2012. I take advantage of the allocation rules of the program to develop two methods to identify the causal effect of a rural road. I find that new paved roads lead to large increases in village employment. Roads lead to an increase in firm size, suggesting that firms are inefficiently small when transportation costs are high. |
