Dr. Asha Sundaram, an esteemed economist from the University of Auckland, presented a seminar titled "Roads, Competition, and the Informal Sector" at the Policy Studies Institute on January 16, 2024. The aim of the seminar was to discuss the impact of road infrastructure on formal and informal firms, focusing on a case study in Ethiopia.
Dr. Asha Sundaram
Dr. Asha Sundaram is a Senior Lecturer in the Department of Economics University of Auckland and Co-Director of the NZ APEC Study Center. She holds an M.Phil. in Economics from the University of Oxford, UK, and a Ph.D. in Economics from Syracuse University, USA. Her research on trade and development issues has been published in leading journals, Oxford University Press books and research-based policy analysis portals such as VoxEU and VoxDev. She has been a visiting scholar at Stanford, Columbia, Michigan, Ann-Arbor and at the Center for Advanced Financial Research and Learning (CAFRAL) at the Reserve Bank of India
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Dr. Asha has worked as a consultant for international organizations such as the World Bank, the Asian Development Bank and the Economic Research Institute for ASEAN and East-Asia (ERIA). Her commentaries on trade and economic policy issues have appeared in media outlets such as Newsroom, New Zealand Herald, Newshub, BBC, Al Jazeera and Politico.
The research, co-authored by Elena Perraa from the University of Turin and Marco Sanfilippo from Collegio Carlo Alberto, examines the impact of increased competition resulting from improved road access to domestic markets on formal and informal production firms. The study uses geolocated information on road improvements as part of a major infrastructure investment program in Ethiopia between 2001 and 2013.
Dr. Sundaram's presentation highlighted the key findings of the research. The study revealed that increased competition due to better road connectivity had a significant impact on the formal and informal sectors. In the formal sector, increased competition was associated with higher labor productivity, capital intensity, investment in physical capital and wages. In the informal sector, however, there was no similar increase in labor productivity or wages. Instead, informal firms faced a decline in capital intensity and investment, a shift in the composition of workers towards those without primary education, and a lower likelihood of working in the informal sector
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The presentation emphasized the importance of taking into account the heterogeneity of firms when studying the impact of infrastructure investments. It also highlighted the important role of the informal sector in job creation and structural change in developing countries.
The seminar participants, who were more of PSI researchers, actively participated in the discussions following the presentation. The research findings stimulated thought-provoking conversations on the impact of policy reforms and the need to address the particular constraints faced by informal sector firms.
Dr. Sundaram thanked the Policy Studies Institute and acknowledged the valuable feedback from the participants.
In conclusion, PSI participants said that Dr. Asha Sundaram's seminar had provided them valuable insights into the relationship between road infrastructure, competition and the formal and informal sectors. The findings contribute to the understanding of how infrastructure improvements can impact different types of firms and have important policy implications for promoting inclusive economic growth.