Essays on development

This thesis studies the effect of the political process on development. The first chapter presents a dynamic game with capital accumulation of war between ethnic groups. Ethnically divided countries are more prone to fighting wars and the threat of war reduces income. Ethnic divisions lead to pressure for the government to redistribute resources from some ethnic groups to other groups. Groups fight each other to control redistribution policy. The model can account for 70 percent of the gap in income levels between countries with and without ethnic divisions. Redistribution distorts investment decisions and war diverts and destroys resources. Lower levels of development occur even in cases where no war is observed. The incidence of civil war increases with ethnic heterogeneity. In ethnically homogeneous countries; majority groups can easily raise armies to deter minorities from fighting. Aid is less effective in ethnically divided countries and can cause civil wars. Up to 15 percent is lost to increased fighting.; The second chapter, joint work with Igor Livshits and James MacGee, formalizes stories linking vested interests to the non-adoption of superior technologieCoalitions of workers skilled in the operation of incumbent technologies lobby government for a prohibition on the adoption of better technologies. For reasonable parameter values; we find that the model generates significant levels of protection equilibrium. The model also generates protection cycles that lead to TFP growth cycles. Protection has a level effect on per capita output. "Productivity slowdowns" lead to increased levels of protection. The level of protection is increasing in the venality of governments. Increased population growth rates increase the value of protection; and can lead to an increase in the level of protection.