Essays on globalization and development [electronic resource]

The first chapter of this dissertation asks the impact of foreign trade on working conditions in developing countries. There is a long-standing debate over the impact of global trade on workers and firms in developing countries. In this chapter, I investigate the causal effect of firm exporting on working conditions and firm performance in Myanmar. This analysis draws on a new survey I conducted on Myanmar manufacturing firms from 2013 to 2015. I use the rapid opening of Myanmar to foreign trade after 2011 alongside identification strategies that exploit product, geographic and industry variations to obtain causal estimates of the impact of trade. I find that exporting has large positive impacts on working conditions in terms of improved fire safety, health-care, union recognition, and wages. Empirical results also indicate that exporting increases firm sales, employment, and management practice scores, and the likelihood of receiving a labor audit, which is typically required by foreign buyers, providing potential explanations for the positive impact of exporting on working conditions. The second chapter, coauthored with Laura Boudreau and Ryo Makioka, investigates the effects of a large accident occurred in developing country firms on their potential trade partners in developed countries. Specifically, we use the 2013 collapse of the Rana Plaza building in Bangladesh, which housed several exporting garment factories, to test for effects on stock prices, sales, costs, and profits of retail and apparel firms in developed countries. We measure CSR activity as participation in voluntary industry agreements established after the collapse to improve working conditions in the Bangladeshi apparel sector. Using an event study with stock prices, we find that firms' stock prices respond heterogeneously to association with the collapse by the media. Firms that experienced the most negative responses in stock prices in the first few days after the collapse agreed to participate in a CSR initiative, at which point their stock prices recovered; their quarterly performance was not significantly affected. Other firms that were initially less affected, but delayed forming a coalition, experienced a decline in their sales and profits in the quarter of the collapse. Our findings support a mechanism in which firms that are punished by stakeholders for the revelation of poor social standards in their supply chains may find that the benefits of CSR outweigh the costs. The third chapter asks whether an increase of foreign firms in developing countries facilitates workers' skill acquisition in firms. An increasing number of foreign firms have been invited to developing countries in the hope of benefiting the host countries' human capital formation. However, foreign entrants may reduce incumbent firms' monopsony power and incentive of training their workers. For evaluating the impact of foreign firm entries on incumbent firms' decisions to train workers, I use a rapid opening of Myanmar to trade and foreign direct investment, which attracted a large number of foreign investments, especially in the garment industry since 2012. Using yearly plant-level panel survey data from the garment industry from 2013 to 2015, I estimated the effects of an increase in the number of firms within 100 meters-neighborhoods of incumbent plants on changes in firm-sponsored training of workers, wage, turnover rates and employment. The results suggest that a foreign firm entry increases turnover rates and reduces the training intensity of incumbent firms.

Keywords: Economics.
Advisor: Bloom Nick
Donaldson Dave
Dupas Pascaline advisor. Thesis advisor
Manova Kalina