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Abstract
How do economies achieve modern structural transformation and economic development in the face of technological, environmental, and regulatory shocks? This dissertation answers this question through three empirically grounded studies exploring forces that are reshaping the way economies produce, trade, and consume. The first study assesses the benefits of digitalization in Indian formal and informal manufacturing (2010–2021) and explores whether these gains come at the cost of employment growth. A nested CES value-added function—with digital capital as a production input—combined with semi-parametric estimation methods reveals significant digital gains for both formal and informal sectors. These gains are larger among formalized ones. Contrary to popular belief, higher digital capital intensity is associated with greater labor and skilled-labor intensity in formal industries. The second study turns to the role of infrastructure in disaster resilience. It examines whether India’s national highways buffer flood-related output losses in informal manufacturing (1990–2016). A stacked difference-in-differences (DID) design with dual and staggered treatments shows that flood losses are largely offset by highway access. These benefits are stronger for plants with transport assets. Further results point to urban agglomeration-type effects and the complementarity between internal logistics and external infrastructure. The third study turns to the regulatory side by evaluating the effectiveness of national trans fat regulations in reducing harmful nutrient consumption—directly through domestic policy and indirectly via trade mediation. Constructing a 161-country food-item panel (2010–2022) and combining staggered DID with mediation analysis, it finds that only strict, enforceable policies—like those in the United States and the European Union—reduce both intake and imports. Weaker policies increase exposure mainly through imports, placing countries with lax regulations at risk of becoming “dietary risk havens.” The findings suggest that effective regulation requires not just adoption but also enforcement and global coordination. Together, these chapters show that modern development increasingly depends on how economies adapt to shocks—through digital capital investment at the micro level, public infrastructure at the meso level, and regulatory coordination at the macro level. While the economic agent’s responses can be heterogeneous, forward-looking strategies across these levels are essential for building an inclusive, resilient, and healthy global economy.