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2010 Erwin Plein Nemmers Prize in Economics

Lecture - April 28, 2011

"Income Distribution and Foreign Trade and Investment"

Elhanan Helpman
Harvard University

International trade flows reveal systematic patterns of specialization in product quality. This is known as "vertical specialization." For example, when rich and poor countries export goods in the same product category, the richer countries tend to sell higher quality goods. In addition, when a country can import goods from several different sources, the higher-quality versions of the good are imported disproportionately from higher-income countries. Since wealthier households typically consume goods of higher quality, patterns of vertical specialization have important implications for the income distributional consequences of world trade.

The lecture will present a new analytic framework for studying trade that captures patterns of vertical specialization. This work that Professor Helpman has developed jointly with Pablo Fajgelbaum and Gene Grossman allows trade patterns to depend on the distribution of income in trading partners and implies that the welfare consequences of trade can vary across income groups within a country. The model predicts, for example, that in many circumstances trade liberalization benefits the poorer households in wealthy countries and the richer households in poor countries. This framework can also be used to study foreign direct investment. One of its main predictions is that two-way foreign direct investment will occur between countries at similar levels of development. This prediction is consistent with the evidence, as most of foreign direct investment takes place among high-income countries.

Conference - May 11-12, 2012

"The Political Economy of Growth and Development"

Friday, May 11, 2012


Session I: Rent-Seeking and Corruption
Chair: Francesco Caselli (London School of Economics)

Pierre Yared (Columbia University): Political Distortions and Endogenous Turnover (joint with Laurence Ales -  Carnegie-Mellon University - and Pricila Maziero -University of  Pennsylvania)

Gerard Padró i Miquel (London School of Economics): Corruption, Intimidation and Whistleblowing: A Theory of Optimal Intervention (joint with Sylvain Chassang - Princeton University)

Raymond Fisman (Columbia University) - commentator
Sandeep Baliga (Northwestern University) - commentator


Session II: Political Economy and Growth in Latin America
Chair: Kenneth Shepsle (Harvard University)

Melissa Dell (Massachusetts Institute of Technology): Insurgency and Long-Run Development: Lessons from the Mexican Revolution

Frederico Finan (University of California, Berkeley): Political Power and Long-Run Development: Evidence from Brazil's Regime Transition (joint with Claudio Ferraz - Pontifícia Universida de Católica do Rio de Janeiro)

Noel Maurer (Harvard University) - commentator
Robin Burgess (London School of Economics) - commentator


Keynote Address I
Alberto Alesina (Harvard University): Ethnicity and Development
Chair:  Guido Tabellini (Bocconi University)
This presentation is based, in part, on an unpublished paper Ethnic Inequality with Stelios Michalopoulos (Brown University) and Elias Papaioannou (Dartmouth College)


Session III: The Political Economy of European History
Chair: Joseph Ferrie (Northwestern University)

David Stasavage (New York University): Oligarchy and Growth: Lessons from Europe's Autonomous Cities

Mark Dincecco (IMT Lucca Institute for Advanced Studies): State Capacity and Long Run Performance (joint with Gabriel Katz – IMT Lucca Institute for Advanced Studies)

John Nye (George Mason University) - commentator
Jeremiah Dittmar (American University) - commentator


Session IV: Food, Famines, and Conflicts
Chair: Benjamin Jones (Northwestern University)

Nathan Nunn (Harvard University): The Impact of United States Food Aid on Civil War (joint with Nancy Qian - Yale University)

David Donaldson (Massachusetts Institute of Technology): Can Openness to Trade Reduce Income Volatility? Evidence from Colonial India's Famine Era (joint with Robin Burgess - London School of Economics)

James Feyrer (Dartmouth College) - commentator
Ross Levine (Brown University) - commentator


Keynote Address II:
Fabrizio Zilibotti (University of Zurich): Conflict and Social Capital in Economic Development
Chair: Kiminori Matsuyama (Northwestern University)
This presentation is based, in part, on the papers War Signals: A Theory of Trade, Trust and Conflict and Seeds of Distrust: Conflict in Uganda both with Dominic Rohner (University of Zurich) and Mathias Thoenig (University of Lausanne)

Saturday, May 12, 2012


Session V: Political Economy and Economic Policy
Chair: Nico Voigtländer (University of California, Los Angeles)

Marco Battaglini (Princeton University): Growth and Fiscal Policy: a Positive Theory (joint with Levon Barseghyan - Cornell University)

Bård Harstad (Northwestern University): Experimentation in Federal Systems (joint with Steven Callander - Stanford University)

Guido Tabellini (Bocconi University) - commentator
David Austen-Smith (Northwestern University) - commentator


Session VI: The Very Long Run: From the Ancient Plough to the Modern Advertisement 
Chair: Nicola Persico (Northwestern University)

Eliana LaFerrara (Bocconi University ): From Public Influence to Private Return: Evidence from the Italian Advertising Market (joint with Stefano DellaVigna - University of California, Berkeley, Ruben Durante - Sciences Po, and Brian Knight - Brown University)

Paola Giuliano (University of California, Los Angeles): On the Origin of Gender Roles: Women and the Plough (joint with Alberto Alesina and Nathan Nunn – both Harvard University)

Daniel Diermeier (Northwestern University) - commentator
Matthias Doepke (Northwestern University) - commentator


Closing Words – Elhanan Helpman (Harvard University)