Office-Selling, Corruption, and Long-Term Development in Peru

By Jenny Guardado (Georgetown University)

The idea that colonial institutions are fundamental in explaining the divergent development trajectories of New World countries is well-established.[1] In this view, colonial institutions led to longstanding differences in the protection of property rights or the provision of public goods in countries such as the US and Canada on the one hand and a number of Latin American countries on the other, affecting economic growth.[2] Yet, some of the most damaging economic consequences of colonialism also came from individuals’ intent on extraction for self-enrichment purposes, even within the same institutional framework.  For instance, in Spanish America, the figure of corregidor or provincial governor, is associated with some of the worst abuses committed against the indigenous population.[3] For this reason, it is important to look into the selection and quality of colonial officials as a key mechanism to understand long-run economic divergence, while holding the type of colonial institutions constant.

In a recent paper, I do precisely that.[4] Relying on a unique market for colonial offices in the seventeenth and eighteenth century Spanish Empire, I show that at least part of the impact of colonialism can be explained by their role in attracting certain types of individuals to serve in the colonial government. To do so, I collected an original dataset of the prices paid for provincial governorships (corregidores) between 1670 and 1750 to distinguish individuals seeking office for extractive purposes and investigate their long-run impact on economic development within Peru. As a market-based measure of profitability, office prices offer a unique opportunity to distinguish empirically which positions had higher returns to extraction. Furthermore, to avoid concerns of the Crown selectively timing sales when prices are high, I always compare prices at times in which Spain is involved in European Wars – thus less selective and more fiscally pressured – across provinces that only vary in the potential for extraction.  Figure 1 below shows the geographical distribution of the provinces’ prices paid between 1670 and 1750, mapped onto current boundaries in Peru.

Figure 1. Current Districts and Office Prices

Results show that office prices were much higher at times in which the Crown relaxed its selection criteria —during fiscal crises caused by European wars—in provinces with greater potential for profit vis-a-vis others. On average, prices were 16% higher in provinces with greater potential to profit from a key extractive activity (known as repartimiento or the forced sales of goods at markup prices) relative to others. This result translates into more than three times the yearly wage of a military captain in the Spanish army at the time. Alternative explanations such as prices reflecting changes in the attractiveness of Peruvian provinces during European wars, or selectivity in sales by the Crown, among others, are not borne out in the data.

Rather, additional analyses using individual buyers’ traits show that provinces with greater opportunities for extraction were more likely to be purchased by “worse” individuals – particularly when the Crown was less selective. In other words, individuals of lower social status, less bound by social and reputation costs, were more likely to pay higher prices to purchase positions with greater returns to extraction. Because social capital and reputation were key mechanisms to enforce compliance with the Crown’s interests in 18th century Spain, these individuals were of plausibly lower quality than those whose career (e.g. military) or social capital (e.g. nobility) were easier to monitor and screen by the Crown. In this sense, office selling allowed a relatively “worse” class of official to rule in the Spanish Empire. Although the practice ended formally in 1750, by then the Crown had sold so many appointments in advance, that buyers were still ruling Peruvian provinces well into the 1770s – on the eve of the nineteenth century independence movements.

The next question is: did the rule by these individuals influence the long-run economic prospects of these provinces? The answer is yes.  Estimates show that a larger gap or difference in office prices at times of low oversight (during wars) relative to periods of high oversight (during peace) is associated with lower household consumption, years of schooling and public good provision. Because province fundamentals – that may influence long-run development – do not vary between war and peace times in Europe, price differences likely capture shifts in the selectivity criteria of the Crown due to fiscal considerations and not other factors. Figure 2 below shows the relationship between the gap in office prices and household consumption.  Importantly, this economic gap is already present in 1827 — just after Peru gained independence—suggesting the importance of colonial rather than postcolonial factors.

Figure 2. Office Prices Differences and HH Consumption

Each scatter dot represents the mean of the outcome of interest within each bin plotted against the mean value of the difference in office prices within each bin. The solid line shows the best linear fit using OLS.

One important reason why we observe these effects today is because extraction during this period led to spontaneous rebellions which were usually brutally put down. Detailed data on local rebellions for eighteenth century Peru show that provinces with higher prices paid during European wars relative to peace times experience a higher number of spontaneous uprisings against their colonial rulers in the office-selling period (1673–1751) than immediately afterwards (1752–1780). Furthermore, this relationship is still visible in recent times: districts with higher prices in the seventeenth and eighteenth centuries also exhibit greater initial support for anti-government Maoist guerrillas (Shining Path) in the 1980s.

Similarly, political violence also led the indigenous population to limit intentionally its interactions with the Spanish and mestizo world. Data from two centuries show that in provinces with higher provinces the ethnic segregation of the indigenous population started to become visible post office-selling (1780), worsened in the nineteenth century (1876), and is even higher in contemporary times (2013). While limiting interactions may have served to “protect” the community, it might have also reduced the gains from participating in the market.

Put together, these results show the importance of appointment mechanisms and the quality of colonial officers to understand the impact of colonialism on economic development, even for cases sharing the same institutional framework.


Acemoglu, D., Johnson, S., & Robinson, J. A. (2001); “The Colonial Origins of Comparative Development: An Empirical Investigation. American economic review91(5), 1369-1401.

Banerjee, A., & Iyer, L. (2005); “History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India.” American economic review95(4), 1190-1213.

Dell, M. (2010); “The Persistent Effects of Peru’s Mining Mita.” Econometrica78(6), 1863-1903.

Engerman, S. L., & Sokoloff, K. L. (1997); “Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies.” How Latin America Fell Behind, 260-304.

Guardado, J. (2018); “Office-Selling, Corruption, and Long-Term Development in Peru.” American Political Science Review, 112(4): 971–995.

Juan, J. (1826). Noticias Secretas de América, Sobre el Estado Naval, Militar, y Politico de Los Reynos del Perú y Provincias de Quito, Costas de Nueva Granada y Chile. (Vol. 2). Taylor.

Moreno Cebrián, A. (1977); El Corregidor de Indios y La Economía Peruana del Siglo XVIII: Los Pepartos Forzosos de Mercancias. Editorial CSIC-CSIC Press.


[1] Engerman and Sokoloff (1997) and Acemoglu, Johnson and Robinson (2001).

[2] Banerjee and Iyer (2005) and Dell (2010).

[3] Juan (1826) and Moreno Cebrián (1977).

[4] Guardado (2018).

Call for Papers: 4th International Conference on Global Food Security Achieving local and global food security: at what costs?

16-19 June 2020 | Le Corum, Montpellier, France

Still time to submit abstracts

Extended abstract submission deadline: 27 September 2019
We have had a fantastic response to our Call for Abstracts but following several requests for a little extra time to submit abstracts, the deadline for both oral and poster submissions will be extended until Friday 27th September 2019.

The 4th International Conference on Global Food Security addresses the topic of food security at all spatial levels from local to global, and from an interdisciplinary and systemic food systems perspective. It aims to better understand environmental, nutritional, agricultural, demographic, socio-economic, political, technological and institutional drivers, costs and outcomes of current and future food security. Interactions with contextual factors including climate change, urbanisation, greening the economy and data-driven technologies will be central. The conference addresses the triple burden of malnutrition: hunger, micronutrient deficiencies and obesity. It explores the state-of-the-art of interdisciplinary insight, addresses the trade-offs that occur – and synergies that can be sought –in transforming food systems. These are aimed at reconciling the competing environmental, economic or social objectives and outcomes towards achieving the Sustainable Development Goals at different levels across spatial and temporal scales.

Contributions which bridge themes or scales, foster interdisciplinarity and integration or address interactions between science and non-academic stakeholders (civil society, private sector and policy makers) are particularly welcome. Single discipline or specific studies are welcome in parallel sessions or as posters.

Topics for sessions and abstracts
The conference emphasizes integrated analyses and perspectives and therefore particularly welcomes contributions on the following cross-cutting topics:

  1. Food security and the Sustainable Development Goals: synergies, tensions and trade-offs
  2. Circularity of food systems at local, regional or global levels
  3. Food security and policy, governance, institutions and trade
  4. Transitions to post-carbon food systems in a post-carbon economy
  5. How to assess future food security: on foresight, forecasting, projecting, predicting and exploring the future
  6. Influencing food consumption and demand considering the food environment
  7. Development, impact and ethics of novel and data-driven technologies in food systems

Such contributions will address all dimensions of food security, preferably in an integrated way. In addition we also accept more specialized contributions that focus on one (or preferably more) of the four dimensions of food security, i.e.:

8. Availability: production, distribution and exchange of food

9. Access: affordability, allocation and preference of food

10. Utilisation: nutritional value, social value and safety of food

11. Stability and dynamics of food security aspects


Click here to view rates and to register



Conference Co-Chairs

Call for papers: Astronomics Society inaugural workshop: The Economics of Space

This workshop will focus on economic and legal analysis of commercial development of space (basically the economics and governance of business in space). We are interested in a range of topics, where possible examples include:
• Regulation of Commerce (taxation of extraterrestrial activity; trade between Earth and space facilities; trade between extraterrestrial facilities)
• Natural Resource Extraction and its Implications (mining of celestial bodies; salvage in space; treaties governing such activities)
• Contract Issues (property rights and contract enforcement without governing bodies; liability and insurance challenges for commercial launch service providers; arbitration)
• Sovereignty Concerns (competition among governments in space; antipiracy enforcement; extraterrestrial sovereignty)
• Competition Policy Issues (rules; effective enforcement; lack of governing authority; market access to space; allocating orbits)
• Technology and Innovation (spillovers between aerospace and other industries; scale economies and market power in commercial launch services and communication services; the development and application of machine learning)
• Multilateral Agreements (design of agreements; dispute settlement and arbitration; managing space trash; allocating orbits)

The goal of the workshop is twofold. The first goal is to identify promising areas for future research, along the lines outlined above. We are interested in the cross-disciplinary mix of economics, law, political science, and applied science. The second goal is to enlist interested researchers in setting up a research and workshop agenda and loose organizational/coordinating structure based on the areas identified.

The workshop will be hosted by the World Trade Institute, University of Bern. Date: 3-4 April 2020. (date to be confirmed)

Deadline for abstracts: 15 December 2019

Ron Davies, University College Dublin
Joseph Francois, University of Bern
Rodrigo Polanco, University of BernContact details:For further details, or to express interest, please contact Sophia Thompson,

Call for Papers:15th Australasian Trade Workshop

Research School of Economics
Australian National University, Canberra, Australia
21 – 22 March (Sat – Sun), 2020

The Research School of Economics at the Australian National University will host the 15th Australasian Trade Workshop (ATW) on 21st and 22nd March, 2020. Keynote speakers will be Giovanni Maggi from Yale and Hylke Vandenbussche from Leuven.

We invite colleagues in this field (JEL-Classification F0 to F2) to submit papers for presentation at the workshop. If you are interested, please send your abstract or preferably your complete paper (in pdf-format only, please) to .

The deadline for submissions is October 31, 2019.

Conference participants are expected to serve as discussants at the workshop. There is no registration fee, but unfortunately we are unable to offer financial assistance to participants. Upon acceptance, participants will be asked to book their travel and accommodation independently.

If you have any further questions about the workshop, please contact the local organisers, Martin Richardson () and Lili Ceric ().

ATW webpage:

Call for Papers: International Trade / Growth and Development in Macroeconomics – Ridge December Forum

The Research Institute for Development, Growth and Economics (RIDGE) is pleased to announce a call for papers for the Workshop on International Trade / Growth and  Development in Macroeconomics to be held in Montevideo, Uruguay, on 17-19 December 2019.

The deadline for submission is September 27, 2019 (12 AM ET).

The 2019 workshop will take place within the framework of the 2019 RIDGE
December Forum along with the following workshops:

– Economic History, 2-3 December
– Financial Stability, 11-12 December, Central Bank of Uruguay
– International Macro, 9-10 December, Central Bank of Uruguay

The RIDGE December Forum aims to favor the spread of high quality research in economics by bringing together prestigious researchers working on the frontier of knowledge to local and regional researchers and policymakers.

Participants to this workshop are welcome to attend the other workshops.

Full papers, written in English, must be submitted for consideration for the workshop. The cover page should include: the title of the paper, institutional affiliation, including address, phone and email of each author and an abstract with the appropriate JEL classification.

Papers should be submitted as pdf and the file should be saved as follows: “Surname of author, name of author, title of paper.pdf”.

Each author can submit and present at most one paper per workshop. Submission of papers to other workshops is possible, however the same paper can only be presented in one workshop within the same forum.

Full papers should be submitted via the website:

Important dates
Deadline for paper submission: September 27, 2019 (12 AM ET)
Notification of organizers decision: October 11, 2019

To view the programmes of previous workshops, please visit:
December 2018:
December 2017:
December 2016:

Further information
Should you have any questions please contact:

For more information about RIDGE see:

Price, Product Quality, and Exporter Dynamics: Evidence from China

By Joel Rodrigue (Vanderbilt University) and Yong Tan (Nanjing University of Finance and Economics)

For the typical Chinese exporter, foreign sales grew exponentially after China’s entry to the WTO.  How was this so-called ‘economic miracle’ achieved in such a short span of time? Answering this question has been the focus of policymakers, government officials, and academic researchers across the globe.

Our recent paper adds to a rich literature studying the determinants of Chinese export growth.[1] In particular, we examine the impact that consumer loyalty has on the market strategies adopted by Chinese firms to successfully grow into high-value export markets.  Even if they were aided by falling trade costs, convincing foreign consumers to purchase Chinese goods for the first time is no small feat.  To clear this hurdle we argue that Chinese firms systematically chose to enter markets producing low quality products and setting low prices.

This doesn’t mean the stereotype that Chinese exports are broadly low price or low quality is accurate.  Rather, as foreign consumers adopted new Chinese goods, producers adjusted production to produce higher quality, higher price, higher-value varieties.  In this sense, the rapid Chinese export-driven economic growth has occurred alongside an observable rise in the nation’s firm-level climb up the value-chain.

Our approach builds on the static O-ring models of endogenous quality choice under monopolistic competition.[2]  We extend this setting to consider the dynamic pricing and product quality decisions by bridging this framework with models of habit persistence and demand accumulation.[3]  A key outcome from this marriage of ideas is that exporting firms will alter markups and product quality over time in order to grow sales rapidly during the initial years after entry and develop a large customer base.

The degree to which firms care about the future, however, depends on the firm’s long-run outlook in competitive export markets.  Small, unproductive firms are more likely to produce low quality products and yield little discount initially because they don’t expect to serve the same consumers more than once.  In contrast, the most efficient firms optimally aim to reach consumers by offering good value for their dollar: high quality products at a relatively low price.

To fix ideas we focus on the production of electric kettles, a small electronic appliance, typical of much of China’s export growth.  In Figure 1 we depict the evolution of export prices, product quality and export sales for a representative firm in a typical export market.  New Chinese exporters, despite producing low quality varieties, sell these goods one percent cheaper than established firms selling the same quality of electric kettle.  While this difference might sound small, it is worth at least 4 percent higher export sales in the firm’s first year – often the difference between breaking even or losing money when a firm enters new markets.

Over time the impacts are even larger.  While the export sales of a typical kettle producer grew by nearly 80 percent between 2001 and 2006, Chinese producers systematically added new features to their products: stainless steel casings, rapid heating systems, larger capacity, etc.  Adding these desirable product characteristics, however, is not free.  Rather, we document that over a five-year period typical input costs rose by twelve percent to incorporate higher quality attributes.

Not surprisingly product quality upgrading is likewise found to drive a large part of Chinese export growth; observed product improvements account for at least 17 percent of the aggregate growth in kettle exports over the same time period. As Chinese firms further entrenched themselves in foreign export markets, their profits rose accordingly: markups increased by nearly 2 percent over the same time period as Chinese firms exported kettles at higher and higher profit margins.

The consequences for trade policy are manifold.  In particular, price effects are likely to be muted in response to changes in trade policy.  While tariff declines are found to directly reduce the price consumers pay, product quality upgrading has an opposing effect.  Quality upgrading offsets price declines because high quality products are more expensive to produce, but also because it induces higher producer markups.

In contrast to the long march towards free and unfettered trade after WWII, recent tariff policy can broadly be characterized by unprecedented tariff increases in many countries.  Nowhere is this more evident than US trade policy vis-à-vis China where tariffs have increased sharply, but – surprisingly – prices have remained remarkably stable despite the rise in trade costs.[4]  Could this reflect changes in product characteristics and markups?  That remains unclear.  What is clear is that Chinese producers will react to tariff change on multiple fronts to maintain and grow their foothold in US export markets.  Ignoring the multi-dimensional responses of producers can potentially misrepresent the nature and impact that tariff policy has on firm behavior.


Amiti, Mary, Stephen J. Redding, and David Weinstein, (2018); “The Impact of the 2018 Trade War on U.S. Prices and Welfare.’’ NBER Working Paper No. 25672.

Fajgelbaum, Pablo, Pinelopi Goldberg, Patrick Kennedy, and Amit Khandelwal, (2019); “The Return to Protectionism.” NBER Working Paper No. 25638.

Gilchrist, Simon, Raphael Schoenle, Jae. W. Sim, and Egon Zakrajsek, (2017); “Inflation Dynamics During the Financial Crisis.” American Economic Review, 107(3): 785-823.

Kugler, Maurice and Eric Verhoogen, (2012); “Prices, Plant Size, and Product Quality.” Review of Economic Studies, 79(1): 307-339.

Piveteau, Paul, (2018); “An Empirical Dynamic Model of Trade with Consumer Accumulation.” Working Paper, Columbia University.

Rodrigue, Joel and Yong Tan, (2019); “Price, Product Quality, and Exporter Dynamics: Evidence from China.” International Economic Review, forthcoming.


[1] Rodrigue and Tan (2019).

[2] See Kugler and Verhoogen (2012).

[3] In our model, habit persistence is based on Gilchrist et al (2017), while demand accumulation is based on Piveteau (2018).

[4] See Amiti et al (2018) and Fajgelbaum et al (2019).

Research Analyst

The Peterson Institute for International Economics, a leading think tank located at Dupont Circle, Washington, DC, seeks a full-time research analyst to work with Dr Chad P. Bown on projects on international trade policy and trade agreements.

Responsibilities include collecting and analyzing economic data, producing charts and graphs for publication and presentations, doing econometric analysis, reviewing policy texts, writing literature reviews, and summarizing results.

Applicants should have a solid understanding of international economics and policy, strong knowledge of econometrics, proficiency with Stata, good writing skills, and attention to detail. Applicants should also be self-driven and demonstrate professional maturity.

In addition to a resume and three references, applicants should also submit a recent writing sample.

The Institute offers a professional work environment, a competitive salary, and excellent benefits. Please email applications to  with the subject line “RA-International Trade Policy.” No phone calls please.

For more: