2016 Rosenstein-Rodan Prize awarded to Mesay Gebresilasse

The Institute for Economic Development awards the Rosenstein-Rodan Prize for the best original research on development economics or a related discipline among PhD students. This year there was an extraordinarily large number of high quality submissions, making the problem of selection particularly difficult. The papers were read and evaluated by a committee of six IED faculty affiliates comprising Kenny Ajayi, Sam Bazzi, John Harris, Bob Lucas, Dilip Mookherjee, and Andy Newman.

This year’s winner of the Rosenstein-Rodan Prize is Mesay Gebresilasse, for his paper titled “Industrial Policy and Misallocation in the Ethiopian Manufacturing Sector.”

The paper uses a rich plant-level census data from 1996-2009 to examine distortionary effects of two policies that were intended to support prioritized sub-sectors and regions on productivity of the Ethiopian manufacturing sector. The first phase implemented during 1996-2002 was an activist industrial policy favoring import substitution. The second phase from 2003-2012 emphasized export promotion. The policies were associated with large misallocation (measured by dispersion of within-industry revenue productivity a la Hsieh-Klenow). These were smaller though still sizable (with industry level TFP gains ranging from 90-180% estimated from removal of the policy) in the second phase. Most of these arose from cross-sectoral (rather than cross-regional) variations in support. Priority sector support policies lessened the extent of misallocation.