By Andrea Prat
I have had the honor of chairing the 2020 Ronald H. Coase Dissertation Award committee. I am very grateful to my fellow committee members: Rocco Macchiavello (London School of Economics), Petra Moser (New York University), and Brian Silverman (University of Toronto).
We received an amazing set of dissertations. It was a pleasure to read them but difficult to choose among them. We first selected four finalists and then picked the winner among them.
The prize goes to Lizhi Liu (Georgetown). Liu’s thesis provides a fascinating tour de force into the emergence and rise of E-commerce in China - one of the most important institutional developments of the last decade. Besides the relevance of the topic and the significant progress in understanding fundamental aspects of modern-day capitalism, the thesis stands out for the vast array of methodological approaches employed. The analysis relies on a remarkable blend of qualitative and quantitative approaches alike. On the qualitative front, the author has conducted over 200 semi-structured Interviews, online ethnography on conversations in e-commerce-focused chat groups, and content analysis of news, policies, and internal documents from local governments and platform companies. On the quantitative front, the thesis includes the first randomized control trial to understand the impact of e-commerce, as well as a remarkable data collection exercise featuring both web-scraped data from 1.76 million online stores, a national online survey of 3,280 business owners (both online and offline merchants), a household survey and data on 28 million transaction records from a large platform.
It is impossible to summarize all the insights in this remarkable piece of scholarly work. If one has to be highlighted, the idea that China has devised a novel solution to the age-old problem of how developing countries can build market supporting institutions struck particularly with the committee. Specifically, the author argues that, with weak rule of law, the state has outsourced part of its institutional functions to key private actors (private regulatory intermediaries (PRIs)) and that China’s e-commerce platforms (e.g., Alibaba’s Taobao.com and Tmall.com) are a prominent example of PRIs. This approach goes beyond traditional analysis emphasizing either the rule of law or informal networks in supporting market development; it provides a lens to understand institutional experimentation in general, it deepens our understanding of state-business relationships in the Chinese context. The thesis contains countless many more facts, hypothesis, tests and should be compulsory reading for any scholar interested in how institutions evolve.
The committee did not have an easy job.The theses of the other three finalists were also impressive:
Desiree Desierto provides a fresh perspective on one the biggest obstacles to the provision of public goods in developing countries: corruption on the part of public officials. She develops a theory that distinguishes between two forms of rent seeking: the theft of government revenues and bribery from public spending. The two forms are partly substitutes from the perspective of officials and the share of the latter increases as government revenues increase, something that Desierto shows both theoretically and through a structural estimation exercise based on a unique dataset on personal wealth of mayors in the Philippines.
Sultan Mehmood’s thesis consists of two chapters on judicial independency and one chapter on foreign aid. The thesis demonstrates a wide range of skills and methodological approaches applied to fundamental questions in the analysis of the relationship between institutions and development. Furthermore, the thesis demonstrates remarkable maturity in the scholarly analysis of Pakistan – covering historical aspects, the analysis of modern-day reforms, and the complex political economy of the country. Perhaps most notable is the contribution in Chapter 1 (Judicial Independence and Development: Evidence from Pakistan), which takes advantage of the staggered implementation of a judicial reform in 2010 to provide a quantitative exploration of the effects of judicial independence. The empirical strategy relies on a difference-in-difference design and on a creative instrument. The paper provides causal evidence that the institution of Presidential appointment exerts considerable influence on judicial decision-making and development and provides a very important contribution to the literature.
Imil Nurutdinov’s thesis studies the determinants of political institutions and their impact on economic development. All three parts deal with the effect of deep institutional changes. The first part explores the role of the Papacy’s “Holy Leagues” as an impediment to state formation in Western Europe. The Leagues provided collective defense against aggression. Rulers paid “insurance premiums” to the Vatican in return for a guarantee that, if they came under attack (especially from “infidels”), the League would provide money and troops. The absence of external threat from non-Christian rulers is used as an exogenous source of variation. The second part investigates the economic origins of discrimination against Jewish entrepreneurs in the Russian empire. The third part studies the effect that the abolition of serfdom had on the economic development of Russia in the second half of the 19th century.
My congratulations to Desiree, Imil, Liz, and Sultan! Thank you to all the candidates and nominators for a great set of dissertations!