Empirical Essays on Infrastructural Investment in Ethiopia and the Use of Satellite Data in Economic Analysis

Infrastructural investments are crucial drivers for promoting growth and activating virtuous cycles of development. Their allocation processes and their socio-economic impact are themes of fundamental importance for development economics. The first two chapters of this thesis employ quasi-experimental methods to analyze the Road Sector Development Programme (RSDP), a large-scale infrastructural investment project implemented in Ethiopia between 1998-2016. The first chapter investigates whether road investment decisions have been influenced by ethnic favoritism mechanisms benefiting the Tigray People’s Liberation Front (TPLF), the dominant component of the Ethiopian People’s Revolutionary Democratic Front (EPRDF). We find evidence of a significant misallocation of public resources towards areas inhabited by the Tigray ethnicity with respect to a suitable control group. The second chapter looks at the impact of the increase in market access due to the RSDP on the productivity of formal and informal Ethiopian firms. Given the important role of informality in Sub-Saharan Africa, it is paramount to disentangle their reaction to productivity shocks from that of formal enterprises. We detect an increase in productivity for formal firms and a decrease in the likelihood of a firm being informal, compatible with the “entry into informality” of less productive formal enterprises and with the presence of informal “survivalist” firms at lower tiers of the productivity distribution. The third chapter employs near-real time satellite data to assess the economic and environmental impact of the Covid-19 contagion containment measures enacted by a selected group of Arab countries, therefore bringing to prominence the use of large, granular, and publicly available datasets for informing crisis response.