This paper analyzes the effect of comparative advantage in international trade on a country's level of financial development. Countries with comparative advantage in financially intensive goods experience a higher demand for external finance, and therefore financial development. By contrast, financial development is lower in countries that primarily export goods which do not rely on external finance. We use disaggregated trade data to develop a measure of a country's external finance need of exports, and demonstrate this effect empirically. In order to overcome the simultaneity problem, we develop a novel instrumentation strategy based on the exogenous geographic determinants of trade patterns.

Abstract As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multiyear randomised pricing experiment among nearly 1,500 recently connected piped water customers in Vietnam reveal month-to-month demand persistence. Based on structural demand estimation, we document how endogenous preferences, if unaccounted for, can lead to low take-up and thereby threaten the financial viability of the new water utility. We also show that such demand persistence calls for pricing schemes that defer lump-sum payment, effectively allowing future consumers to subsidise their present selves.

This paper provides an economic rationale for the practice of consanguineous marriages observed in parts of the developing world. In a model of incomplete marriage markets, dowries are viewed as ex ante transfers made from the bride's family to the groom's family when the promise of ex post gifts and bequests is not credible. Consanguineous unions join families between whom ex ante pledges are enforceable ex post. The model predicts a negative relationship between consanguinity and dowries and higher bequests in consanguineous unions. An empirical analysis based on data from Bangladesh delivers results consistent with the model.

Abstract Global terrorist organizations attract radicalized individuals across borders and constitute a threat for both sending and receiving countries. We use unique personnel records from the Islamic State in Iraq and the Levant (Daesh) to show that unemployment in sending countries is associated with the number of transnational terrorist recruits from these countries. The relationship is spatially heterogeneous, which is most plausibly attributable to travel costs. We argue that poor labor market opportunities generally push more individuals to join terrorist organizations, but at the same time, limit their ability to do so when longer travel distances imply higher travel costs.