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Essays on Trade and Development

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Title: Essays on Trade and Development
Author: Piedrahita, Natalia
Department: Department of Food, Agricultural and Resource Economics
Program: Food, Agriculture and Resource Economics
Advisor: Hailu, Getu
Abstract: This dissertation contains three essays. The first two essays examine the factors that affect demand learning in export markets. The first essay examines whether foreign-ownership affects the demand-learning rates of Canadian exporters. Similarly, the second essay examines the effect of linguistic and geographic distance on demand learning among Colombian exporters. The third essay turns the focus to gender empowerment within households, assessing how women’s empowerment responds to household income diversification in Ethiopia. In the first essay, I assess the impact of foreign ownership on export market dynamics for Canadian exporters. I estimate the effect of foreign ownership on demand learning in destination markets. The findings suggest that domestic-owned exporters experience a high degree of uncertainty about consumer demand and thus adjust their quantity exported by larger amounts when there is a new demand shock than foreign-owned exporters do. In the second essay, I examine whether geographic and linguistic distance to destination markets affects demand learning among exporters. While exporting to nearby countries may reflect lower costs and lower cultural differences, firms with demand uncertainty may exploit these lower costs to test the waters in nearby markets. The findings of this paper suggest that firms exporting to markets further away are better able to distinguish between random shocks and signals about demand and thus react less to a new shock than a firm exporting to a nearby market. Firms that export to linguistically similar countries learn faster and react more to demand shocks than firms exporting to linguistically dissimilar countries do. In the third essay, I provide empirical evidence of the relationship between women's empowerment and household income diversification in Ethiopia. The literature notes that income diversification is an important pathway for increasing women's empowerment and lifting them out of poverty by increasing income, smoothing consumption, and increasing bargaining power. Women are found to have considerably lower levels of empowerment than men, and that income diversification has a positive effect on empowerment. More specifically, women are more empowered in households with non-farm income such as non-farm self-employment income, transfer income, and income from financial, non-farm real-estate assets.
Date: 2021-04
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