Doctoral Dissertation Research: The Political Determinants of Economic Exchange

Columbia University, New York NY

Investigators

Abstract

General Abstract Confidence in basic economic exchange is an important building block for economies. This confidence in economic exchange is often affected by state institutions that possess the authority to enforce contracts which ensure agreements are not broken. In much of the world, however, weak state institutions limit the confidence of citizens and businesses that contracts and deals will be enforced fairly. As a result, economic exchange is stifled and inefficiencies persist. Understanding how contracts and economic exchange are affected, particularly in contexts where only a subset of individuals enjoy privileged access to state institutions, is essential for development yet not well understood. This project will assess how varying levels political connectivity influences economic exchange. The findings from this study will provide valuable insight as to how different strategies can spur economic development in areas where the rule of law is not evenly distributed among citizens. Technical Abstract This project consists of a conjoint experiment among firm leaders, as well as an innovative field experiment to assess how varying degrees of connectedness influences economic exchange in weak states. Building off existing work on political networks, contracting, and economic exchange in a weak state, this conjoint experiment will help to identify the characteristics of potential business partners that matter most to firms in developing economies. The randomized control trial (RCT) will test how political connections affect change in realistic contexts, by randomly varying signals of connections between the two parties engaged in exchange, and observing how these signals serve to shape the contracts and deals that result. The findings will be among the first causal estimates of the impact of political connections on economic exchange.