Political Economy and Economic Development: Conflict, FDI bonanza, Mobile Technology and False News

BY  DR CATERINA GENNAIOLI AND BEATRIZ RODRIGUEZ-SATIZABAL

On the 4th of December, 2019, the Centre for Globalisation Research (CGR) hosted their annual Workshop on Political Economy and Economic Development and the Globalisation Seminar. The event attracted QMUL staff, researchers from other UK universities and PhD students. Caterina Gennaioli (CGR Director, SBM), Pierre-Louis Vézina (King’s College), Carlo Schwarz (Warwick University) and Andrea Tesei (SEF QMUL), presented at the Workshop their most recent empirical work. The presentations covered a broad range of topics.

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Gennaioli presented a paper which studies the effect of introducing competition for funding in a community driven development program on conflict. The research shows that moderate levels of competition reduce conflict within competing communities, and ethnic type of conflict. On the contrary, competition does not impact conflict between competing communities. Interestingly, the results hold only in contexts characterised by high ethnic fractionalization. The paper suggests that higher competition might induce competing communities to put more effort to increase their chances of winning the funds. Effort can consist in higher participation at village meetings or more cooperative behaviour among different ethnic groups, which in turn would translate into a lower incidence of conflict.

Pierre-Louis Vezina presented a paper assessing the impact of resource discoveries in FDI bonanzas and local growth multipliers. It analyses how unexpected oil or gas discoveries in Mozambique trigger large FDI bonanzas in non-resource sectors. The paper uses data from UNCTAD to provide estimates of the job creation effect of such bonanza: according to their estimates, one FDI job generates up to 6.5 additional jobs. Moreover, the authors find that across countries there is a 58 per cent increase in FDI in the 2 years following a giant discovery. These booms are driven by new projects in non-resource sectors such as manufacturing, retail, business services and construction. This research highlights how giant discoveries act as shocks and drive economic fluctuations, generally development friendly.

Carlo Schwarz’s paper measures the impact of twitter on hate crime as an extreme case of anti-minority action in the US. In particular, the research refers to the anti-Muslim hate crimes as a reaction to Trump’s tweets from 2015. This approach allows the authors to provide a measure of the importance of social medial for the propagation of hate crime and some evidence of the link between media and anti-minority violence in a democracy. Results show that the increase in anti-Muslim sentiment in the US since the start of Trump’s presidential campaign has been concentrated in counties with high Twitter usage. The authors find that one standard deviation increase in Twitter usage is associated with a 38 per cent larger increase in anti-Muslim hate crimes since Trump’s campaign start. The paper uses data on hate crime by the FBI and geolocated data of the tweets, both by Trump and his followers during the SXSW festival.

Andrea Tesei’s paper studies the effect of mobile-phone network expansion in rural India on technology adoption and productivity in agriculture. Tesei et al. use data on mobile coverage, agricultural inputs and productivity. The paper evaluates the role of the expansion of the mobile phone coverage and the introduction of the Kisan Call Centers for agricultural advice on the use of seed variety and chemical fertilizers. The authors analyse the content of 1.4 million phone calls made by farmers to seek advice. Authors find that there was an increase in the adoption of high yielding variety seeds and chemical fertilizers. They also find a higher take-up of agricultural credit on those areas receiving mobile phone coverage.

Professor Ekaterina Zhuravskaya from the Paris School of Economics and EHESS closed the event. During her presentation, she discussed the political effects of internet and false news. After two decades of ICT revolution with the spreading of internet and fast mobile internet, the use of social media has sharply increased in the last 10 years and at the same time there have been changes in the global political trends. Based on these trends, Zhuravskaya studies the relationship between the expansion of internet, the use of social media and the changes in political trends in European elections. In her lecture, she discussed the narrative about the rise of the populist movements, the false news dissemination and the impact of fact-checking via social media. Two main lessons are drawn from her most recent papers on the subject. First, 3G internet improves the information of voters, especially when traditional media is censored, and internet is not. In addition, populist movements benefit from internet in terms of an increase in their vote share while other opposition parties do not. Second, when it comes to the role of fact checking, Zhuravskaya presented the results of a randomized online experiment she conducted in France during the 2017 Presidential campaign. She concluded that while ameliorating the factual knowledge of voters, fact checking does not affect political preferences and the support for the candidate, even though voters update their knowledge.

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