Essays on Trade Liberalization, Financial Integration and Development: Poland in the EU, Investment in Europe, and HIV Infection in Zambia



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This dissertation is composed of three essays. In the first essay, Poland in the EU: Closer is Better, I study the spatial heterogeneity in outcomes of trade liberalization in Poland. I find that the 2004 EU accession of Poland was associated with a 7.2% gain in total factor productivity (TFP) for an average manufacturing firm located 150 km away from the German border. The average TFP gain for a manufacturing firm located 600 km away was about half of that, 4.1%. I also find that a manufacturing firm in Poland closer to the German border paid 3.2% higher wages and was 2.2% more likely to exit. These results are robust to using different distance measures, exclusion of firms located in big cities and using alternative TFP estimation methods. I also develop a theoretical mechanism which explains the disparate effects of trade liberalization on different regions in Poland. I add a spatial friction to the Melitz (2003) model. The model predicts that countries entering an economic union are affected differently across their territory: stronger competition for labor results in higher wages and a higher cutoff level of productivity in the border area of the union. As a result, less productive domestic firms exit and border regions experience larger increases in their average TFP.

In the second essay, Who Owns Europe's Firms?, coauthored with Sebnem Kalemli-Ozcan, Bent So rensen, Carolina Villegas-Sanchez and Vadym Volosovych we investigate foreign ownership in 24 European countries using a harmonized bilateral firm-level dataset during 1999-2012. We observe the amount of foreign investment into each firm over time together with the identity of direct and ultimate investors. We aggregate the firm-level data according to destination and origin country and provide stylized facts on investment patterns. The majority of direct foreign investment in Europe comes from other European countries. However, a much larger share of ultimate foreign ownership of European firms are from North America and Asia, reflecting that such investors invest in European firms indirectly, through European financial centers. We evaluate the role of structural reform policies on foreign investment. Our results show that more dissimilar product market regulation in a country-pair, the more direct foreign investment flows between them, exploiting regulatory arbitrage. However, ultimate foreign investors prefer to invest in countries with similar regulatory frameworks.

In my third essay, Did Mining Industry Affect the HIV Rate among Zambian Women?, I study the effect of mining industry on the HIV prevalence rates among Zambian women. I use the 2007 DHS (Demographic and Health Surveys) dataset. I find that Zambian women in 50 kilometer range of a mine are 2-3 percentage points more likely to test positive for HIV. I also find evidence that having a partner who is a skilled manual worker (the type of worker that miners are) increases the odds of having HIV infection by 3 percentage points.



Poland, European Union, Total factor productivity, Foreign investment, Europe, Ultimate owners, HIV infection, Zambia