Bureaucrats, Transplant and Institutional Quality II

Economists consider institutions the rules of the game in markets and in societies. While there is a huge literature on institutions and economic growth, the literature on what kind of institutional reforms actually works in particular settings is quite thin. The received view among many scholars and practitioners - often implicit but also occasionally explicit too - is that poor countries should simply emulate the rich nations, and "import" their institutions. However, experience shows that such transplantation rarely works. It produces the illusion of reform, with few of its practical benefits. This research project tackles this issue with a newly developed dataset that looks at the role played by skilled civil servants in the success of institutional development. We look into the career paths and the education of over 14,000 colonial officers in the British Empire to see if their presence right before independence left an impact on the governance of these former colonies. Did officers with a conservative education at elite public schools in England regularly fail to support the modernization of newly independent colonies? Why were legal officers and statisticians so much better in handing over to local counterparts? We argue that importing institutions needs specific human skills and understanding of both the institution to be reformed and of local norms in the developing economy. The research project uses a mix of quantitative (statistical analysis) and qualitative (historical analysis) methods to show trends and to find out more about the underlying historic processes. Four publications are proposed over a period of 36 months. This research project contributes to a very relevant question in development economics: How can we make institutional reform work? It is also very original: A full digital archive of the British officers in the Empire has never been collected before. The project brings in international co-authors from the USA, UK and Holland and promotes this kind of research at the University of Vienna.

Economists consider institutions the rules of the game in modern economies. There is a huge literature on how the right rules improve markets and lead to economic growth and development. However, economists do not fully understand what kind of institutional reforms actually works in particular settings. The received view among many scientists and practitioners - often implicit but occasionally explicit too - is that poor countries should simply emulate the rich nations, and "import" their institutions. However, experience shows that institutional reforms based on such transplantation rarely work. These reforms often appear successful from the outside but fail to deliver real practical benefits. The research project "Bureaucrats, Transplant Effect and Institutional Quality II" approached this issue with a newly developed dataset that permits investigating the roles and skills of civil servants and how they matter in the success of institutional development. The project was financed by an Erwin Schrödinger Fellowship. This is a grant, which enables investigators to spend time at universities outside Austria and work together with more senior scientists. The project consequently conducted research together with economists at the University of Warwick (UK) and the University of Groningen (Netherlands). What exactly did we do and what are the results? In the research that has come out of this project, we analyzed the career paths and the education of over 14,000 colonial officers in the British Empire to see if their presence right before independence left an impact on the governance of these former colonies. Our first results have been published in international journals. We found for example, that former colonies experienced lower corruption and delivered more efficient services to the citizens, when British officers remained there as advisors after independence. One assumption is that a prolonged hand-over period improved the overall performance of civil services. To be sure, we interviewed over 100 retired colonial officers in the UK. There responses largely confirmed our assumptions. As simple as this may sound, this is an important new argument in the development literature. What will happen next? Not least because of this project, looking at the skills of civil servants is gradually becoming an exciting new field in economics. A follow-up project financed by the Austrian National Bank's Anniversary Fund currently investigates which mechanisms and processes placed colonial servants to their posts. Did the best-suited candidate get the job? Did it matter whether an officer had attended an elite school like Eton or Cambridge? These questions matter for how modern development agencies, such as the World Bank, place their experts. Together with colleagues from other European universities, we plan to look into this issue in a larger project financed by the European Research Council (ERC).