Fletcher Faculty Members Aker and Klein Awarded NBER/Gates Foundation Grant
H
ow do cell phones affect market prices in geographically separated markets? What role do transportation costs have in price divergence? Professor Jenny Aker investigated these questions during her doctoral dissertation research in Niger. Now, she, Professor Michael Klein, and Professor Steve O’Conell of Swarthmore College will build upon her findings thanks to a grant from the Bill and Melinda Gates Foundation in their African Success Program, which is administered in conjunction with the National Bureau of Economic Research (NBER). Aker, Klein and O’Connell hope to help regional trade organizations develop policies that will foster market integration.
Aker earned her MALD from Fletcher in 1997, and then spent six years with Catholic Relief Services in West Africa working on food security. She used her experience during her doctoral work at the University of California, where she earned her Ph.D. in 2008. During her fieldwork in Niger and Nigeria, she observed how merchants in Niger used mobile phones to learn about prices of staples like millet in weekly markets, and thereby determine where to go to sell their crops.
Klein, who has been at Fletcher since 1991, has taught generations of Fletcher students about research that shows that price divergences across international borders demonstrates a lack of globalization. For example, it would be natural to expect less price divergence between goods sold in Boston and Toronto than between Boston and Los Angeles; not only is Boston much closer to Toronto than to LA, but one might expect that the US-Canadian border does not impede trade (or price convergence) since there is more trade across that border than across the border separating any other two nations. But this is not the case. Research shows that price divergences between US cities and relatively proximate Canadian cities is much higher than between cities in the US, or between cities in Canada. Thus, despite popular perceptions, the world is still far from “flat.”
But what about international integration in poor countries? Research on the effects of borders has focused on rich countries like the US and Canada. Aker, Klein, and O’Connell are among the first to study these “border” effects in developing countries. These countries face challenges in integrating in the world economy. For example, Niger is a land-locked country with poor transportation systems. This contributes to market fragmentation. But, as Aker has shown in her dissertation, mobile phones have been increasing market integration within Niger. Will it have the same effect between Niger and its neighbors? Aker, Klein and O’Connell will be examining this issue. They will also examine the role of ethnicity. The Niger–Nigeria border separates ethnic groups’ traditional regions. The Hausa ethnic group, for instance, lives on both sides of the border.
In August, the three researchers will travel to West Africa to conduct field research. When they return, they will share their findings at future NBER/Gates Foundation conferences, in scholarly articles, and with stakeholders in Nigerian market organizations. Aker and Klein expect this project to inform policy as well as expand academic understanding of market integration. “It’s the Fletcher ideal,” said Klein. “We conduct scholarly research that has practical relevance and can really help people.”
Cybčle Cochran F09