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The colonial origins of fiscal capacity: Evidence from patronage governors

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  • Xu, Guo

Abstract

We combine historical personnel data from the British colonial administration with modern public finance data to study the impact of colonial governors on fiscal capacity. Exploiting rule-based variation in the allocation of governors connected to their superior at the time of appointment, we find that modern-day countries exposed to more patronage governors exhibit lower fiscal capacity today. These negative effects are persistent over time and driven by indirect taxes that patronage governors disproportionately controlled in the colonial period. The results thus provide evidence for a public finance channel through which the effects of patronage appointments extend beyond decolonization.

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  • Xu, Guo, 2019. "The colonial origins of fiscal capacity: Evidence from patronage governors," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 263-276.
    • Handle: RePEc:eee:jcecon:v:47:y:2019:i:2:p:263-276
    DOI: 10.1016/j.jce.2019.01.001
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    3. Feng, Bo & Lu, Bei & Wang, Zhen & Yu, Dandan, 2025. "Patronage networks and multitasking incentives: Evidence from local officials’ responses to public crises in China’s centralized bureaucracy," World Development, Elsevier, vol. 190(C).
    4. Omang O. Messono & Simplice A. Asongu, 2021. "Historical Prevalence of Infectious Diseases and Entrepreneurship: the Role of Institutions in 125 Countries," Research Africa Network Working Papers 21/096, Research Africa Network (RAN).
    5. Savoia, Antonio & Sen, Kunal & Tagem, Abrams M. E., 2023. "Constraints on the executive and tax revenues in the long run," Journal of Institutional Economics, Cambridge University Press, vol. 19(3), pages 314-331, June.
    6. Touria Jaaidane & Sophie Larribeau, 2024. "State Capacity in Seventeenth-Century France: The Role of the Intendants," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-06, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    7. Jiafu An & Seth Armitage & Wenxuan Hou & Xianda Liu, 2020. "Do checks on bureaucrats improve firm value? Evidence from a natural experiment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(5), pages 4821-4844, December.
    8. Hup, Mark, 2024. "Labor coercion, fiscal modernization, and state capacity: Evidence from colonial Indonesia," Explorations in Economic History, Elsevier, vol. 94(C).
    9. Tang, Lianzhou & Xu, Wenli, 2025. "Patronage and pollution," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    10. Omang Ombolo Messono & Fred EKA & Fabrice Assoumou Zambo, 2025. "Elite quality and the pathway to prosperity: a cross-country mediation analysis," SN Business & Economics, Springer, vol. 5(6), pages 1-43, June.
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    12. Zhang, Wei & Ke, Jinjun & Ding, Yougang & Chen, Sicen, 2024. "Greening through finance: Green finance policies and firms' green investment," Energy Economics, Elsevier, vol. 131(C).

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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