Climate Change, Structural Change and Innovation

In this dissertation, I study the sources of economic growth and structural transformation by combining a quantitative framework with micro data. As the main theme of the dissertation, I focus on the impact of climate change on the agricultural sector of developing countries and spatially analyze its impact on the agricultural productivity and long-run distribution of farming activity. Then, I move onto the non-agricultural sector of a developed country by analyzing the source of economic growth through product innovation.

In chapter 1, I study the impact of climate change on farm size and agricultural productivity in developing countries. I combine pixel-level climate data from the Global Agro-Ecological Zones (GAEZ) project with rich household-level data on agricultural production from the World Bank’s LSMS for Uganda. I assess the implications of anticipated climate change on aggregate productivity through the lens of a two-sector model with endogenous farm size and crop choice, featuring heterogeneity in both land quality and farmer ability.

In chapter 2, I study the interaction of climate change with transport frictions to determine the long-run distribution of farming activity in Ethiopia. I assess the implications of anticipated climate change through the lens of a spatial model featuring locational heterogeneity in land quality, transportation costs, and agricultural production, by incorporating a quantitative spatial framework to rich micro-data combined from different sources. I calibrate the model to the benchmark economy with baseline (1961-1990) geographical conditions, then change geographical conditions alone to the future level (year 2050).

Where does the product innovation come from? From entering plants or incumbents? From existing products or brand new products? In chapter 3, I answer these questions by quantifying the sources of innovation in South Korea over the years 2001-2011. To account for the sources of innovation, I combine unique Korean data on the universe of non-farm private sector establishments and the growth framework of Garcia-Macia, Hsieh, and Klenow, which infers the sources of innovation from job creation and job reallocation flows among incumbent and entrant firms.