Essays in Development Economics: Debt Relief and International Location of Industry

Sammanfattning: The first paper shows that if the period following the granting of debt relief is taken into account, debt relief increases adjustment effort (investment), irrespective of whether there is an initial debt overhang or not. The second paper deals with the clothing sector, which has been a driver of diversification and growth for countries that have graduated into middle income. Using a partial adjustment panel data model, this study tries to explain the international location of clothing production based on a combination of variables suggested by the Heckscher-Ohlin theory and by New Economic Geography theory. Our Blundell-Bond system estimator results show that closeness to intermediates such as low-cost labor and textile production has a positive effect on clothing production. Factor endowment and closeness to the world market have inversed U-shaped effects. This is expected, because above a certain level several other sectors benefit even more from closeness and factor endowments, driving resources away from the clothing industry.