Q&A with King Center Postdoctoral Fellow Juan Felipe Riaño

Juan Felipe Riaño is a postdoctoral fellow at the King Center and an applied microeconomist with research interests spanning the fields of political economy, development economics, and economic history. In August 2023, he will join the economics department at Georgetown University as an assistant professor.

Tell me a bit about yourself and your background. What were you doing before coming to Stanford and what drew you to apply for the Postdoctoral Fellows Program at the King Center?

I am an economist and engineer from Colombia. My research agenda lies at the intersection of political economy, development economics, and economic history. Before coming to Stanford, I was finishing my PhD in economics at the University of British Columbia in Canada, where I lived from 2016 to 2022. As I was searching for positions during my last year of the PhD, I sought out programs that would allow me to continue studying development economics from a political economy perspective. The postdoc program at the King Center stood out as one of the few programs - if not the only one - with a dedicated theme focusing on researching the factors contributing to better governance, inclusive and resilient democratic institutions, and their crucial role in economic development.

Your research focuses on a broad range of topics related to political economy in low- and middle-income countries. What sparked your interest in focusing on the political economy of developing countries?

I was born and raised in Bogotá, Colombia, during one of the most significant and transformational phases of the country, which included the introduction of a new constitution in 1991, the opening of the country to the global economy, as well as the massive escalation of internal conflict during the 1990s. These experiences have profoundly shaped my research interests, which today focus on exploring the determinants of state capacity in developing countries and investigating the enduring consequences of conflicts and historical institutions on economic development.

I could trace the manifestation of these interests way back to my undergraduate studies in economics. As I delved into theoretical models in microeconomics and macroeconomics, I noticed a significant gap in how these models treated the role of democracy, the state, and its bureaucracy, as well as the political processes shaping taxation and public spending. These crucial factors were often treated as exogenous forces that disrupted "the optimal choices" of individuals and households, rather than as fundamental elements to understand and enhance the process of economic development and growth.

My curiosity deepened when I started working as a research assistant at the Centro de Estudios sobre Desarrollo Económico (CEDE) at Universidad de Los Andes. Under the guidance of my master's thesis supervisor, Leopoldo Fergusson, I was introduced to the field of political economy. This exposure ignited my passion for examining economic development issues through a different lens.

Then, throughout my doctoral studies, this interest in the political economy of developing countries grew even stronger. I was fortunate to have an exceptional group of mentors who further fueled my curiosity and provided me with invaluable guidance. Francesco Trebbi, Siwan Anderson, Matilde Bombardini, Felipe Valencia, Thorsten Rogall, and Patrick Francois each offered unique and complementary perspectives, motivating me to continue exploring these complex issues.

The political economy of developing countries is a fascinating and multifaceted field. It allows us to examine how political institutions, policies, and societal factors interact with economic incentives and outcomes. By studying this dynamic relationship, I believe we can contribute to a better understanding of the challenges and opportunities of sustainable and equitable development in LMICs.

Your job market paper shines a light on the pervasiveness of bureaucratic nepotism in Colombia and analyzes the effectiveness of anti-nepotism reforms. What did the data reveal about the extent to which nepotism is affecting the public sector?

The data revealed that family connections in the Colombian public sector are quite widespread and potentially harmful to the process of state capacity building. I found that from 2011 to 2017, about 38 percent of civil servants in Colombia had relatives working in the public sector, 18 percent had family ties to a manager or a supervisor, while 11 percent of employees worked alongside family members within the same agency. More importantly, I found that close family connections (those below four degrees of consanguinity) and overall institutional performance were negatively correlated.

Notably, family connections significantly distorted the career progression of middle- and lower-tier bureaucrats in the country. Those with family ties to non-elected high-ranking bureaucrats had a 40 percent higher chance of receiving hierarchical promotions and enjoying 2 to 5 percent higher salaries. These benefits were typically based on temporary promotions and were concentrated within extended family networks that were more challenging to regulate and audit by the Office of the Civil Service. My research also indicated that qualifications often took a backseat when promoting family members. While promoted workers generally had more education, public sector experience, and fewer records of misconduct, these differences became insignificant or even reversed when the promotees were related to top non-elected bureaucrats.

Regarding the effectiveness of anti-nepotism reforms, I examined the impact of a 2015 policy change that prohibited the appointment of family members up to four degrees of consanguinity. Although the reform did lead to a 15 percent reduction in illegal connections, it did not result in an improvement in workforce quality or a complete eradication of bureaucratic nepotism. Surprisingly, a significant proportion of mid-tier and low-tier bureaucrats involved in illegal connections prior to the reform managed to retain their positions by reshuffling posts within the public sector. In contrast, top bureaucrats strategically responded to the reform by favoring family members through temporary wage increases, as the law did not explicitly restrict such pay raises.

In 2022, you published a paper that modeled the politics of state capacity building under clientelism and the incentives provided to political parties when providing public goods. This paper tested the model with data from a Mexican land allocation program. What is the most important finding from this work? Were you surprised by it?

The most important finding is that the incumbent Partido Revolucionario Institucional (PRI) in Mexico strategically increased the cost of providing public goods to opposition parties precisely in places where it started experiencing more political contestation.

From 1910 to 1994 Mexico redistributed more than 50% of all its agricultural land as part of one of the biggest agricultural reforms in Latin America.  Land distributed by the central government  to peasant communities in the form of ejidos was designated communal property, and therefore could not be sold or rented, effectively tying people to their land. Therefore, Ejidos became key to the PRI’s incumbent dominance because they facilitated the party’s clientelistic practices. The lack of individual property rights made peasants highly dependent on the PRI as the only source of agricultural credit, infrastructure investments, and technical assistance.

The PRI’s power was essentially uncontested from the late 1920s to the late 1950s. However, the country’s vibrant post-revolution economic growth reached its limits in the late 1950s, which were characterized by general social discontent and protests from the main sectors of society previously under the control of the PRI’s clientelistic machine: industrial workers, students, teachers, and peasants. This discontent was channeled into organized political opposition, which represented an important threat to the PRI’s hegemony in many areas of the country.

Interestingly, after the 1960s, the PRI started allocating agricultural land significantly farther away from desirable municipality headquarters when politically challenged. This strategy effectively sabotaged their opposition because it was more difficult and expensive to get goods and services to more rural communities and thus made it harder when  the opposition  won for them to fulfill campaign promises about general public good provision. Notably, this increase in distance of allocated lands was not explained by the amount of land available for redistribution or by the stock of land already distributed at different distances from the municipality centers.

This finding was surprising to us because it contradicts the conventional theory arguing that stronger political competition always leads to better functioning and more equitable governance. Instead, our paper suggests that in areas where clientelism is prevalent, increased electoral competition can deter state capacity building and impede economic development.

You have been at the King Center as a postdoctoral scholar for almost a year now and will be starting at Georgetown University this fall as an assistant professor of economics. What has your experience been like at Stanford and the King Center?

My time at the King Center and Stanford has been phenomenal. The supportive community, the mentorship from distinguished faculty, and the intellectual stimulation have all played an integral role in shaping my growth as a researcher during this year. I am immensely grateful for the opportunities, support, and guidance provided by Kate Casey, Pascaline Dupas, Jessica Leino, and Grant Miller, who have been invaluable mentors throughout my time here.

One remarkable example of the support I received is the conference the King Center helped me to organize and fund. Jointly with Kate Casey and Guo Xu, we instituted the first "Call to Service Conference," which brought together scholars and practitioners from diverse backgrounds to discuss recent unpublished work on how selection and incentives shape political and bureaucratic institutions and outcomes.

Being part of the development group at the King Center has been a delightful experience. I have thoroughly enjoyed the engaging discussions during the development tea and seminars in the economics department, as well as the political economy seminar at GSB. I will definitely miss all those speaker dinners following the seminars with Dana Foarta and Karmini Sharma.

While it is bittersweet to leave the King Center, I am incredibly excited about my upcoming transition to Georgetown University. I hope all the great friends I made here can visit me one day.