UC Davis

This dissertation explores various regional responses to globalization. The first chapter studies how booming regions spread local windfall from a commodity boom in the world market to other regions. The second chapter explores price divergence in the rice markets as an impact of a binding import ban, a policy imposed to support farmers from facing import competition. Lastly, the third chapter shows how the proliferation of electronic media, an aspect of globalization, facilitates improvement in marketing technology in advertising tobacco products. I show that such improvement in reaching consumers and potential consumers increases the smoking participation of young adults.

Chapter 1 studies how regions respond to price shocks in the presence of internal migration. This paper examines Indonesia in the 2000s as it faced a commodity boom for palm oil, which became one of its main export commodities. I exploit the variation in the land shares and crop suitability to compute the potential contribution of main crops across district economies as a measure of local exposure to shocks. I find that the commodity boom increased the purchasing power of palm oil-producing districts. These districts also received more migration, providing evidence that palm oil price shocks were no longer localized. Indeed, internal migration spread the windfall. I also find spillover to neighboring districts. However, these relatively higher levels of purchasing power did not last after the commodity boom ended in 2014. I show that the palm-oil sector grew through extensification as a response to the price shocks, with no indication of growth through intensification. I estimate the overall welfare gains in Indonesia between 2005 and 2010 and find substantial gains from migration.

Chapter 2 explores and documents the price divergence that occurs due to a large and ongoing import ban on rice imposed by Indonesia. I find that despite the increase in the retail price of rice, rice-producing districts do not enjoy higher purchasing power. The trade protection did not spur growth in the rice sector either. I find that the import ban causes price divergence in two dimensions. First, it causes regional price divergence, implying the lack of arbitrage across rice markets. Second, I find evidence of incomplete pass-through as the wedge between the retail prices and farm-gate prices widens. These findings provide guidance for further research and trade policy evaluation to consider aspects such as imperfect competition and domestic trade frictions in determining the distributional impact of the import ban.

Chapter 3 is motivated by the fact that the tobacco epidemic kills more than 8 million people every year. Despite a global decline in smoking rates, smoking prevalence is rising in many developing countries. This paper exploits the temporal and regional variation in the proliferation of television reception across Indonesia in the 2000s to examine the impact of advertising in electronic media on smoking participation by young adults. Applying the marketing theory drawn from international trade, I find evidence of a new-consumer margin in tobacco consumption due to improvement in marketing technology. Living in a subdistrict with one standard deviation higher television exposure increases male young adults smoking participation by 4-6%. This impact is especially significant for those of 17 to 19 years old but not older persons.