Regional Development and Growth: Impact of Politics, Geography and Digital Governance
Open AccessThis dissertation consists of three separate studies focusing on the impact of politics, geography, and digital governance on development. Chapter 1 investigates the effect of political competition on the allocation of public bank branches in the context of Turkey. Chapter 2 evaluates the impact of the geographic closeness of people on economic growth in the United States by creating a new measure, Spatial Population Concentration. Chapter 3 studies the role of digital technologies to create participatory governance by focusing on the potential linkage between pothole complaints and electoral outcomes in Moscow mayoral elections. In Chapter 1, I study the role of political competition on the allocation of public bank branches across Turkey. I use a large data set of number of bank branches for 188 banks and 14 nationwide elections for 81 cities covering the period 1961-2016. Building on a difference-in-differences strategy that exploits the greater influence of politics on state-owned banks as compared to their private counterparts, I find that greater political competition produces better state-provided financial services. Cities which were won by lower margin of victory are more likely to enjoy an increase in the number of state-owned bank branches the year before the elections. By highlighting the role of delivering financial services with high public visibility to win votes in elections, this study adds a political angle to the literature explaining financialization through bank branching. Chapter 2 is co-authored with Constantin Burgi (St Mary’s College of Maryland). In this chapter we look at the spatial angle of economic growth. We consider two ways how the spatial distribution can enter endogenous growth models. In the first, there is a transportation cost for specialized labor and in the second, the goods need to be transported to consumers. Both ways impact the decision of firms whether to implement ideas that is linked to how close people live together. Specifically, the number of implemented ideas is larger where people live closer together and these areas experience faster economic growth. In order to measure how close people live together, we create the new measure Spatial Population Concentration (SPC) that captures the average number of people within a given radius of each person within a geographic area. This measure allows for more accurate measurement of the population concentration than traditional measures like population density or urbanization, as it is not affected by large uninhabited areas or capped. Next, we show for US counties that areas with a high spatial population concentration experience faster growth in line with our model. Specifically, we find that counties with a low value of our measure in 1990 experienced substantially lower GDP growth over the next 25 years. Chapter 3 is co-authored with Gulnaz Sharafutdinova (Russia Institute, King’s College London) and Jevgenijs Steinbuks (The World Bank). This chapter takes advantage of a publicly salient policy sphere – of road quality – in the capital city of Russia to explore the use of digital technologies as means of aggregating information and demonstrating the governmental capacity and effectiveness. It focuses on the potential linkage between the road quality based on citizens’ complaints and electoral outcomes in two rounds of Moscow mayoral elections in 2013 and 2018. The data on more than 200,000 complaints are collected from two online platforms rosyama.ru and gorod.mos.ru, and combined with local election data. The causal relationship between these two processes is established, making use of an arguably exogenous variation in the differences across local weather conditions during the heating season that differentially affects pothole creation but is uncorrelated with electoral outcomes. The results indicate that greater use of digital technologies (measured by pothole complaints) result in increased number of votes and higher margin of victory for the incumbent. They highlight the role of digital technologies as a tool to create participatory governance mechanisms and convey to the public an image of a transparent, responsive, and capable government.
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