Essays on Development Economics

Abstract

Developing countries face numerous challenges that can impede their economic growth and development. These challenges manifest in several areas, including firms, governments, and households. Firms operating in these environments often encounter significant constraints, such as limited access to credit, poor contract enforcement, political instability, and inadequate infrastructure for transportation. For governments, resources are typically scarce, and information asymmetries can be high due to the prevalence of informal economies. Meanwhile, households often struggle to access quality education and healthcare, leading to lower levels of human capital. Taken together, these factors can significantly hinder opportunities for economic progress.

This thesis focuses on three critical issues in developing countries, with a special emphasis on Mexico. The first chapter investigates the prevalence of small firms in Mexico's retail sector. It argues that high transport costs result in smaller effective market sizes, leading to the proliferation of smaller and lower-quality firms. In the second chapter, a framework is developed to guide the existing literature on social protection. It reviews and discusses the design and implementation of redistribution and income support programs in an environment with a large informal sector. Lastly, the third chapter examines the impact of expanding low-cost private healthcare access in Mexico. It finds a decrease in public healthcare usage but the results on which types of visits are being substituted away imply efficient sorting of patients and suggest that expanding low-cost alternatives can improve access and the allocation of care. By examining these issues, I aim to shed light on some of the challenges faced by firms, governments, and households in developing countries and discuss paths forward.

JEL Classification: I130,I380,R110