Shreyas Gadgin Matha

In this interview article, we embark on a fascinating journey through time alongside the winners of the 2023 DRUID Best Paper Award. DRUID, an annual research conference renowned as the hub of cutting-edge research on innovation and the dynamics of structural, institutional, and geographic change, bestows this award on the most innovative and exceptional conference submission. As longstanding allies of DRUID, Industry and Innovation offers an exclusive peek behind the curtains, unveiling the untold stories that underlie award-winning research.

In 2023, this coveted DRUID prize was awarded to a paper by Ljubica Nedelkoska, Shreyas Gadgin Matha, James McNerney, Andre Assumpcao, Dario Diodato, and Frank Neffke. Their work stands out through an impressive data collection effort and the exploration of a compelling and urgent research question – how technological change has impacted the gender pay gap. Throughout this interview, the author team takes us down memory lane, retelling the story behind their research project. On this journey through time, we trace the genesis of the authors’ innovative ideas and the intricate pathways they navigated in their quest to understand the past as a means of unravelling the future of work and its implications for gender inequality in the labour market. This journey not only takes us back in time but also points to potential avenues for future research and open questions that lie ahead.

We build a new longitudinal dataset of job tasks and technologies by transforming the U.S. Dictionary of Occupational Titles (DOT, 1939 -1991) and four books documenting occupational use of tools and technologies in the 1940s, into a database akin to, and comparable with its digital successor, the O*NET (1998 -today). After creating a single occupational classification stretching between 1939 and 2019, we connect all DOT waves and the decennial O*NET databases into a single dataset, and we connect these with the U.S. Decennial Census data at the level of 585 occupational groups. We use the new dataset to study how technology changed the gender pay gap in the United States since the 1940s. We find that computerization had two counteracting effects on the pay gap -it simultaneously reduced it by attracting more women into better-paying occupations, and increased it through higher returns to computer use among men. The first effect closed the pay gap by 3.3 pp, but the second increased it by 5.8 pp, leading to a net widening of the pay gap.

The Colombian Amazon faces the dual challenge of low economic growth and high deforestation. High rates of deforestation in Colombia have led to a perceived trade-off between economic development and protecting the forest. However, we find little evidence of this trade-off: rising deforestation is not associated with higher economic growth. In fact, the forces of deforestation of some of the world’s most complex biodiversity are driven by some of the least complex economic activities, like cattle-ranching, whose subsistence-level incomes are unable to meet the economic ambitions for the region. All the while, the majority of the Amazonian departments’ population works in non-forested cities and towns, at a distance from the agriculture frontier that forms the “arc of deforestation.” The relative urbanization of the Amazonian departments, despite the vast land mass available, recognizes that prosperity is achieved through close social-economic interactions to expand the knowledge set available to be able to produce more, and more complex activities. Achieving economic goals therefore relies on creating new productive opportunities in non-forested, urban areas.

The risk of deforestation reduces incentives to improve the connectivity of Amazonian departments with major cities and export markets. The remoteness of these departments increases the cost of ‘exporting’ goods to markets outside the departments. Poor connectivity contributes to the low economic complexity of the departments. In turn, the low complexity reduces incentives to coordinate new investments that would generate returns to greater connectivity. Coordination failures, which occur when a group of economic actors (e.g., firms, workers) could achieve a better outcome but fail to do so because they do not coordinate their actions, are widespread in all three of the Amazonian departments studied. This limits the creation of new capabilities and productive diversification to generate new jobs and higher incomes.

We posit that economic growth in the Colombian Amazonian is limited by a “connectivity trap” whereby the lack of external market connectivity restricts economic complexity, and, in turn, the low complexity fosters the coordination failures that limit returns to new diversification. Ultimately, low returns to diversification further reduce incentives to improve connectivity. Underpinning the connectivity trap is the belief that limiting the connectivity of Amazonian departments with large Colombian cities and the broader global economy will limit incentives for deforestation. Yet, deforestation has accelerated in recent years, despite the continued poor connectivity. We argue that Colombia must create a new national law to curb deforestation by eliminating the financial incentives for land speculation. Reclassifying forested lands under the control of national protection systems with severe restrictions on economic activities and strengthened enforcement, as detailed in an accompanying report, provides the needed legal clarity regarding land formalization. Within the law to eliminate incentives for deforestation, the national government should create a new development approach for the Colombian Amazon. This approach must move beyond a natural resource-based approach to the region, to center on the productive potential of its urban areas, and the carbon markets and tourism potential of its forested areas. One pillar of this approach is to build new public sector capabilities to coordinate investments into new, targeted productive sectors to create new national-local mechanisms of investment promotion. A second pillar is to improve connectivity to external markets through road and air investments between Caquetá, Guaviare, and Putumayo and major cities and ports.

La Amazonía colombiana enfrenta un desafío doble: bajo crecimiento económico y alta deforestación. Las altas tasas de deforestación en Colombia han llevado a que se crea que el desarrollo económico no puede tener lugar si se protege la selva. Nosotros no encontramos evidencia que sustente esa dicotomía: el aumento de la deforestación no está asociado a un mayor crecimiento económico. Las fuerzas detrás de la deforestación de una de las áreas con mayor biodiversidad en el planeta se sustentan en algunas de las actividades económicas menos complejas, como la ganadería extensiva, cuyos ingresos son incapaces de cumplir con las ambiciones económicas de la región. Al mismo tiempo, la mayoría de la población de los departamentos amazónicos trabaja en ciudades y pueblos desprovistos de selva, lejos de la frontera agropecuaria que forma el “arco de deforestación”. La relativa urbanización de los departamentos amazónicos, pese a la gran masa de tierra disponible, constituye un reconocimiento de que la prosperidad solo se logra mediante interacciones socioeconómicas que expanden el conjunto de conocimientos disponible para que se pueda producir más, y mediante actividades más complejas. Por lo tanto, para alcanzar las metas económicas hay que crear nuevas oportunidades productivas en las áreas urbanas sin selva.

El riesgo de deforestación reduce los incentivos para mejorar la conectividad de los departamentos amazónicos con las grandes ciudades y los mercados de exportación. El carácter remoto de estos departamentos aumenta el costo de “exportar” bienes a mercados que están fuera de estos departamentos. La conectividad precaria de la región contribuye a su baja complejidad económica, que a su vez reduce los incentivos para coordinar nuevas inversiones que podrían generar retornos a partir de una mayor conectividad. Las fallas de coordinación - que ocurren cuando un grupo de actores económicos (como empresas y trabajadores) podrían lograr un mejor resultado, pero no logran hacerlo pues no coordinan sus acciones respectivas - son extendidas en los tres departamentos amazónicos bajo estudio. Esto limita la creación de nuevas capacidades y la diversificación productiva que podrían generar nuevos empleos y mayores ingresos.

Planteamos que el crecimiento económico en la Amazonía colombiana está siendo limitado por una “trampa de conectividad” donde la falta de conectividad con los mercados externos restringe la complejidad económica, y a su vez la baja complejidad alienta las fallas de coordinación que limitan los retornos de una nueva diversificación. A fin de cuentas, los bajos retornos de la diversificación reducen aún más los incentivos para mejorar la conectividad. Como trasfondo de la trampa de conectividad está la creencia de que limitar la conectividad de los departamentos amazónicos con las grandes ciudades colombianas y el resto de la economía global limitará también los incentivos para la deforestación. Pero la deforestación se ha acelerado en los últimos años, mientras que la conectividad sigue siendo muy mala. Nosotros argumentamos que Colombia debe crear una nueva ley nacional para frenar la deforestación que elimine los incentivos financieros de la especulación con tierras, al reclasificar las áreas selváticas bajo control de los sistemas nacionales de protección para que tengan severas restricciones sobre las actividades que se puedan emprender en ellas, y se refuercen las labores de cumplimiento de la ley, como se comenta en detalle en el reporte siguiente. Con una ley que elimine los incentivos para la deforestación, el gobierno nacional debe crear un nuevo enfoque del desarrollo para la Amazonía colombiana. Este enfoque debe trascender el basado en los recursos naturales y centrarse en el potencial productivo de las áreas urbanas, así como en los mercados de carbono y el potencial turístico de las áreas selváticas. Un pilar de este enfoque es la construcción de nuevas capacidades en el sector público, que le permitan coordinar inversiones en nuevos sectores productivos específicos, para crear nuevos mecanismos locales y nacionales de promoción de inversiones. Un segundo pilar es la mejora de la conectividad con los mercados externos, mediante inversiones en carreteras y transporte aéreo entre Caquetá, Guaviare y Putumayo, y las grandes ciudades y los puertos.

¿Hay que sacrificar la selva para traer prosperidad económica a la Amazonía colombiana? Según este compendio de investigación compuesto por una serie de estudios sobre esa región, la respuesta es “no”: la percepción que hay un dilema entre crecimiento económico y protección de la selva es una falsa dicotomía. Los factores que impulsan la deforestación y la prosperidad son distinguibles entre sí, y tienen lugar en sitios diferentes. La deforestación ocurre en la frontera agropecuaria, donde uno de los entornos con mayor complejidad biológica del mundo está siendo destruido por algunas de las actividades económicas menos complejas, en particular la ganadería extensiva. En cambio, los motores económicos de la Amazonía son sus áreas urbanas, que en su mayoría están ubicadas lejos del borde de la selva, como es el caso de las áreas localizadas en el piedemonte y que no cuentan con un bosque denso. Estas ciudades ofrecen mayor complejidad económica con su acceso a un rango más amplio de capacidades productivas en actividades de mayores ingresos, con poca presencia de las actividades que favorecen la deforestación. Tal vez la cara menos notoria de la vida en cada una de las tres regiones amazónicas estudiadas, Caquetá, Guaviare y Putumayo, es que la mayoría de la gente vive en áreas urbanas. Este hecho dice mucho sobre la geografía económica de esos lugares: incluso en las partes más remotas de la Amazonía, la gente quiere vivir cerca de los demás, en áreas densamente pobladas. Esto además corrobora los hallazgos de nuestra investigación global en las últimas dos décadas: para traer prosperidad hay que expandir las capacidades productivas disponibles a nivel local y así diversificar la producción de ese lugar hacia más actividades y que posean mayor complejidad.  

Does economic prosperity in the Colombian Amazon require sacrificing the forest? This research compendium of a series of studies on the Colombian Amazon finds the answer to this question is no: the perceived trade-off between economic growth and forest protection is a false dichotomy. The drivers of deforestation and prosperity are distinct – as they happen in different places. Deforestation occurs at the agricultural frontier, in destroying some of the world’s most complex biodiversity by some of the least economically complex activities, particularly cattle-ranching. By contrast, the economic drivers in the Amazon are its urban areas often located far from the forest edge, including in non-forested piedmont regions. These cities offer greater economic complexity by accessing a wider range of productive capabilities in higher-income activities with little presence of those activities driving deforestation. Perhaps the most underappreciated facet of life in each of the three Amazonian regions studied, Caquetá, Guaviare, and Putumayo, is that the majority of people live in urban areas. This is a telling fact of economic geography: that even in the remote parts of the Amazon, people want to come together to live in densely populated areas. This corroborates the findings of our global research over the past two decades that prosperity results from expanding the productive capabilities available locally to diversify production to do more, and more complex, activities.

Considering the case of the proposed airport in Vlora, South Albania, this report analyzes the channels through which a new greenfield airport can contribute to regional economic development. In December 2019, the Government of Albania opened a call for offers to build a new airport in the south of the country. While there is evidence indicating that the airport could be commercially viable, this does not provide a grounded perspective on the channels by which the airport could boost the regional economy. To evaluate how the new airport would interact with existing and potential economic activities, this report evaluates three of the most important channels of impact by which the airport could serve as a promoter: (1) economic activities directly related to or promoted by airports, (2) the airport’s potential contribution to the region’s booming tourism sector and (3) the potential for the country’s development of air freight as a tool for export promotion. In each of these three cases, the report identifies complementary public goods or policies that could maximize the airport’s impact in the region.

The operation of the airport itself could stimulate a series of economic activities directly related to air traffic services. Airports have the ability to mold the economic structure of the places immediately around them, acting both as a consumer and as a supplier of air transport services. Not only activities related to transportation and logistics thrive around airports, but also a variety of manufacturing, trade and construction industries. Nevertheless, the agglomeration benefits of a successful aerotropolis are not guaranteed by the construction of an airport. For South Albania’s new airport to actualize its potential returns, integrated planning of the airport site will be required, with focus on real estate planification and provision of complementary infrastructure.

Establishing an airport in Vlora has the potential to spur regional development in South Albania through facilitating the growth of the tourism sector and its related activities. Albania’s tourism industry has seen strong growth in the last two decades, but still lags behind its potential. Albania only has a strong penetration in the tourism market of its neighboring markets, and the high seasonality of the tourism season further limits the sector’s growth. The establishment of an airport in South Albania would ease some of the tourism industry constraints tied to transportation into the country and region. Given the high reliance of the tourism industry on its many complementary inputs, more than one area of concern may have to be addressed for the impact of the new airport to be maximized. Facilitating transportation access around the South Albania region and specifically to tourist sites; preparing natural and cultural heritage sites for tourism use and expanding tourism infrastructure to accommodate potential growth are some of the interventions analyzed.

Airfreight infrastructure could in theory provide opportunities to improve the competitiveness of Albanian exports but developing a successful air cargo cluster is no simple task. An airport can facilitate an alternative mode of transport for specific types of goods and hence promote a country’s exports. In Albania’s case, not only existing textile and agriculture products could be competitively exported through air freight, but also air freight itself could improve Albania’s position to diversify into “nearby” industries, identified by the theory of Economic Complexity. Nevertheless, an effective air freight strategy does not and cannot uniquely depend on the simple availability of a nearby airport. Air cargo operations require both traffic volume that Albania may not be able to provide, as well as complementary cargo-specific infrastructure. Although the potential for air freight in South Albania could be high, it is by no means a safe bet nor does it imply with certainty significant impact in the immediate future.