| Summary: | Chapter two investigates whether insular cultures are less likely to adopt new technologies. Combining GIS crop production data with unique language data, I show that societies that are isolated on the language tree produce less of the crops that required adoption, but not of the crops not requiring adoption. Endogeneity of cultural isolation is addressed by exploiting ancestral migration route direction. Cultural isolation persists due to the endogeneity of land settlement. Land selection caused increased polarization and decreased fractionalization, a pattern that is argued to limit the incentives for cross-societal communication. Chapter three uses contract level data on a portfolio of 197 coffee washing stations in 18 countries to identify the sources and consequences of credit imperfections. Due to moral hazard, default increases following increases in world coffee prices just before the maturity date of the contract. Strategic default is deterred by relationships with the lender and foreign buyers: the value of informal enforcement amounts to 50% of the value of the sale contract for repaying borrowers. A RDD shows that firms are credit constrained. Prices paid to farmers increase implying the existence of contractual externalities along the supply chain. Chapter four analyzes the effect of interethnic trust on economic relationships in Rwanda/Burundi. The endogeneity of defaults impact on trust is dealt with by exploiting the eligibility of respondents’ grandparents to coffee corvée in the colonial era. Corvée contributed to Hutu-Tutsi tensions. Corvée eligibility is used as an exogenous instrument for interethnic trust, measured using a unique dataset collected in the field. Grandparent eligibility for corvée reduces interethnic trust, and that low trust increases the likelihood of being defaulted on. The evidence suggests that default becomes more likely among less trusting individuals due to adverse selection, not moral hazard.
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