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Bureaucrats in Developing Countries

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Marriott Philadelphia Downtown, Meeting Room 405
Hosted By: Econometric Society

Individuals and Organizations as Sources of State Effectiveness, and Consequences for Policy Design

Michael Carlos Best
,
Stanford University
Jonas Hjort
,
Columbia University
David Szakonyi
,
George Washington University

Abstract

How much of the variation in state effectiveness is due to the individuals and organizations responsible for implementing policy? We investigate this question and its implications for policy design in the context of public procurement, using a text-based product classification method to measure bureaucratic output. We show that effective procurers lower bid preparation/submission costs, and that 60% of within-product purchase-price variation across 16 million purchases in Russia in 2011-2015 is due to the bureaucrats and organizations administering procurement processes. This has dramatic policy consequences. To illustrate these, we study a ubiquitous procurement policy: bid preferences for favored firms (here domestic manufacturers). The policy decreases overall entry and increases prices when procurers are effective, but has the opposite impact with ineffective procurers, as predicted by a simple endogenous-entry model of procurement. Our results imply that the state’s often overlooked bureaucratic tier is critical for effectiveness and the make-up of optimal policies.

Corrupt Bureaucrats: The Response of Non-Elected Officials to Electoral Accountability

Michele Valsecchi
,
New Economic School

Abstract

Modern state bureaucracies are designed to be insulated from political interference. Successful insulation implies that politicians' electoral incentives do not affect bureaucrats' corruption. I test this prediction by assembling a unique dataset on corruption, promotions and demotions for more than 4 million Indonesian local civil servants. To identify the effect of reelection incentives, I exploit the existence of term limits and a difference-in-difference strategy. I find that, in districts where politicians can run for reelection, bureaucrats' corruption is 38 percent lower than in districts where they cannot, and that the effect is driven by both top and lower level bureaucrats, which constitutes new evidence of the deep, far-reaching effects of politicians' accountability on local civil servants. Robustness tests, including placebo estimates, the control for politicians' ability and restricting the sample to close elections, support the main findings. I then explore a mechanism where bureaucrats have career concerns and politicians facing reelection manipulate such concerns by increasing the turnover of top bureaucrats. Consistent with this mechanism, I find that reelection incentives increase demotions of top bureaucrats and promotions of administrative bureaucrats.

Monitoring Public Employees in Paraguay: Can Technology Adoption by the Government Improve Agricultural Extension Services for Poor Farmers?

Ernesto Dal Bo
,
University of California-Berkeley
Frederico Finan
,
University of California-Berkeley
Laura Schechter
,
University of Wisconsin-Madison

Abstract

TBA

The Costs of Patronage: Evidence From the British Empire

Guo Xu
,
University of California-Berkeley

Abstract

I study how patronage affects the promotion and performance of senior bureaucrats within
a global organization: the British Empire. I combine newly digitized personnel and public
finance data from the colonial administration 1854-1966 to study the inner workings of a
bureaucracy that controlled close to a fifth of the earth’s land mass at its peak. Exploiting
the ministerial turnover in London as a source of within-governor variation in social connections,
I find that governors are more likely to be promoted to higher salaried colonies when
connected to their superior during the period of patronage. At the same time, they provide
more tax exemptions, generate less revenue, invest less and are less likely to be recognized for
their service. The promotion and performance gaps disappear after the abolition of patronage
appointments. Exploiting a fixed allocation rule to predict the appointment of connected
governors unrelated to colony characteristics, colonies administered for longer periods by connected
governors during the period of patronage exhibit lower fiscal capacity today. Exposure
to connected governors after the removal of patronage has no long-run impact.
Discussant(s)
Benjamin A. Olken
,
Massachusetts Institute of Technology
Frederico Finan
,
University of California-Berkeley
Gianmarco Leon
,
Pompeu Fabra University & Barcelona Graduate School of Economics
Ruixue Jia
,
University of California-San Diego
JEL Classifications
  • A1 - General Economics