Essays on the production and consumption behavior of households in emerging markets

Zhang, S T (2017) Essays on the production and consumption behavior of households in emerging markets. Doctoral thesis, University of London: London Business School.

Abstract

This document summarizes my research on the production and consumption behavior of households in emerging markets, notably in relation to infrastructure, which emerging markets have often lacked until recently. As academic, policy, and business attention turns to the opportunities, challenges, and features of emerging markets, I look to contribute to the academic debate as well as to policy and managerial thinking. There are two essays. The first essay focuses on production, and explores drivers of innovation adoption among farming households. I was motivated by watching the work of NGOs in rural India teaching agricultural techniques to farmers. Some farmers would adopt the techniques while others would not. What drives this heterogeneity in responses to innovation? Conversations with NGO workers revealed conflicting theories, and existing literature points to factors - often psychological traits or cultural attitudes - that would be difficult to implement for an NGO on the ground or as policy. Using the NGO's unique dataset of their past innovation disseminations, I show that infrastructure is a substantial factor behind innovation adoption that operates by freeing up slack time for households to innovate. The second essay focuses on consumption, and explores drivers of education demand among poor rural households. Demand for education is of unique interest in emerging markets because it can lift the household out of poverty through higher future earnings. What motivates a household to pursue education? Existing literature has focused on the economic returns - if future earnings are higher, more will be spent on education. This essay proposes an infrastructure driver for education demand in emerging markets - poor rural households pursue education when they are more frequently exposed to urban areas. I show that exposure to cities via highway construction increases household demand for education.