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English Abstract: We develop a model of the politics of state capacity building undertaken by incumbent parties that have a comparative advantage in clientelism rather than in public goods provision. The model predicts that, when challenged by opponents, clientelistic incumbents have the incentive to prevent investments in state capacity. We provide empirical support for the model’s implications by studying policy decisions by the Institutional Revolutionary Party (PRI) that affected local state capacity across Mexican municipalities and over time. Our difference-in-differences and instrumental variable identification strategies exploit a national shock that threatened the Mexican government’s hegemony in the early 1960s. The intensity of this shock, which varied across municipalities, was partly explained by severe droughts that occurred during the 1950s. Spanish Abstract: Desarrollamos un modelo teorico sobre los incentivos politicos para la construccion de capacidades estatales por parte de gobernantes cuya ventaja comparativa es el clientelismo y no la provision de bienes publicos. El modelo predice que, cuando enfrentan competencia de opositores, los gobernantes clientelistas tienen el incentivo a bloquear las inversiones en capacidad estatal. Presentamos evidencia empirica que apoya estas implicaciones estudiando decisiones del Partido Revolucionario Institucional (PRI) que afectaron la capacidad estatal a traves de los municipios mexicanos y a lo largo del tiempo. Nuestras estrategias de diferencias en diferencias y variables instrumentales aprovechan un choque nacional que amenazo la hegemonia del gobierno mexicano al comienzo de la decada de 1960. La intensidad de este choque en distintos municipios estuvo en parte explicada por la sequias severas que ocurrieron en los anos 50.

Development outcomes come in ‘clusters’ that seem difficult to exit. Using original data from Colombia, we present evidence of the interconnection between two critical political components: state weakness and clientelism. State weakness creates the right environment for clientelism to flourish. Clientelism sets in place a structure of incentives for politicians and citizens that is detrimental to building state capacity. We show that vote buying, as a measure of clientelism, and tax evasion, as a measure of state weakness, are highly correlated at the micro level. We also report evidence that both practices are widely accepted in society, a result consistent with a deeply entrenched relationship of mutually reinforcing influences. Finally, we propose a set of mechanisms that underlie the hypothesis that a weak state and widespread clientelism are part of a political equilibrium with multiple feedback loops. Our results suggest that state weakness is a trap that is likely hard to exit. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

We examine the long-term impact of violence on educational attainment, with evidence from Colombia's La Violencia. Individuals exposed to violence during, and especially before, their schooling years experience a significant and economically meaningful decrease in years of schooling. This impact has consequences beyond human capital accumulation: exposed cohorts engage in activities with less human capital content. Violence thus influenced aggregate development - particularly the process of structural transformation, in which some sectors gain prominence as income increases. The effects result not so much from the direct destruction of physical infrastructure, but from effected households' responses to the hardships of conflict.

High-powered incentives for the military and security services have become a common counterinsurgency strategy over the last several decades. We investigate the use of such incentives for members of the Colombian army in the long-running civil war against left-wing guerillas, and show that it produced several perverse side effects. Innocent civilians were killed and misrepresented as guerillas (a phenomenon known in Colombia as ‘false positives’). Exploiting the fact that Colombian colonels have stronger career concerns and should be more responsive to such incentives, we show that there were significantly more false positives during the period of high-powered incentives in municipalities where a higher share of brigades were commanded by colonels and in those where checks coming from civilian judicial institutions were weaker. We further find that in municipalities with a higher share of colonels, the period of high-powered incentives coincided with a worsening of local judicial institutions and no discernible improvement in the overall security situation.

Medical innovations during the 1940s quickly resulted in significant health improvements around the world. Countries with initially higher mortality from infectious diseases experienced larger increases in life expectancy, population, and subsequent social conflict. This cross-country result is robust across alternative measures of conflict and is not driven by differential trends between countries with varying baseline characteristics. A similar effect is also present within Mexico. Initial suitability conditions for malaria varied across municipalities, and anti-malaria campaigns had differential effects on population growth and social conflict. Both across countries and within Mexico, increased conflict over scarce resources predominates and this effect is more pronounced during times of economic hardship (specifically, in countries with a poor growth record and in drought-stricken areas in Mexico). At least during this time period, a larger increase in population made social conflict more likely.

Tax evasion lies at the core of the relationship between citizens and the state: it reflects the level of trust in the state and compliance with society’s implicit social contract. However, empirically analyzing tax evasion is challenging, particularly because there are few direct and reliable measures. We conduct list experiments on a large sample of households to estimate how frequently consumers are willing to be complicit in value-added tax (VAT) evasion, as well as the extent of social desirability bias in respondent answers. Around 20 percent of respondents agree to make purchases without a receipt in order to avoid paying VAT; surprisingly, they are not ashamed to admit this openly. Evasion is more prevalent in places with more informality and less physical presence of the state, as well as among poorer, less educated individuals and those who disregard the rule of law.

Development outcomes come in ‘clusters’ that seem difficult to exit. Using original data from Colombia, we present evidence of the interconnection between two critical political components: state weakness and clientelism. State weakness creates the right environment for clientelism to flourish. Clientelism sets in place a structure of incentives for politicians and citizens that is detrimental to building state capacity. We show that vote buying, as a measure of clientelism, and tax evasion, as a measure of state weakness, are highly correlated at the micro level. We also report evidence that both practices are widely accepted in society, a result consistent with a deeply entrenched relationship of mutually reinforcing influences. Finally, we propose a set of mechanisms that underlie the hypothesis that a weak state and widespread clientelism are part of a political equilibrium with multiple feedback loops. Our results suggest that state weakness is a trap that is likely hard to exit.

Exchanging one’s vote for particularistic benefits—practices usually grouped under clientelism—is often thought to weaken programmatic links between citizens and politicians and disincentivize public good provision, as well as undermine voter autonomy and the ideal role of elections. However, empirically analyzing this key phenomenon for the working of democracies entails formidable challenges. We conduct list experiments on a large sample of households to estimate the incidence of clientelistic vote buying, as well as the extent to which respondents refrain from openly recognizing this behavior. Nearly one out of every five respondents engage in clientelism, and, surprisingly, they do not feel ashamed to admit it. Guided by the existing literature and systematically verifying the sensitivity of the results to model specification, we examine the robust correlates of clientelism and discuss the implications of our key findings.

English Abstract: Can the media determine the success or failure of institutional reforms? We study the adoption of secret voting in the US and the role of media in this arguably crucial step to improve democracy. Using a difference-in-difference identification strategy and a rich dataset on local newspapers, we find that in areas with high levels of media penetration democratization outcomes improved following the adoption of the secret ballot. Specifically, the press contributed to the decrease in partisan attachment and support for dominant parties. The press also undermined the manipulation of electoral boundaries and the unintentional decline in turnout incentivized with the introduction of the secret ballot. We consider multiple concerns about our identification strategy and address the potential endogeneity of newspapers using an instrumental variable approach that exploits the introduction of wood-pulp paper technology in 1880 combined with counties’ woodland coverage during the same period. Exploring the heterogeneous effects of our results, we argue that the media mattered through the distribution of information to voters and the increase of public awareness about political misconduct. Spanish Abstract: ?Pueden los medios determinar el exito o fracaso de las reformas institucionales? Estudiamos la adopcion del voto secreto en los Estados Unidos y el papel de los medios de comunicacion en este paso crucial para mejorar la democracia. Utilizando una estrategia de diferencia-en-diferencias y una base de datos completa de periodicos locales, encontramos que en areas con altos niveles de penetracion de los medios los resultados asociados con la democratizacion mejoraron tras la adopcion del voto secreto. Especificamente, los medios contribuyeron a una caida en el apego partidista y el apoyo a partidos dominantes. Los medios tambien erosionan la manipulacion de fronteras electorales y la reduccion no intencionada en la participacion electoral promovidos por la introduccion del voto secreto. Evaluamos varias posibles criticas a nuestra estrategia de identificacion y lidiamos con la posible endogeneidad de los periodicos utilizando una variable instrumental que aprovecha la introduccion del papel de pulpa de madera en 1880 junto con la cobertura boscosa de los condados en ese periodo. Explorando los efectos heterogeneos de nuestros resultados, argumentamos que los medios influyeron a traves de la distribucion de informacion a los votantes y el incremento de la conciencia publica sobre las malas conductas politicas.

Traditional theories of democracy suggest that political representation of excluded groups can reduce their incentives to engage in conflict and lead to lower violence. However, this argument ignores the response of established elites when (1) their interests are threatened by the policy stance of new political actors and (2) elites have a comparative advantage in the exercise of violence. Using a regression discontinuity approach, we show that the narrow election of previously excluded left-wing parties to local executive office in Colombia results in a one standard deviation increase in violent events by right-wing paramilitaries. We interpret this surge in violence as a reaction of traditional elites to offset the increase in outsiders' access to formal political power. Consistent with this interpretation, we find that violence by left-wing guerrillas and other actors is unaffected and that violence is not influenced by the victory of right-wing or other new parties in close elections. © 2020, Midwest Political Science Association

This paper evaluates the impacts of increased coordination, accountability, and leadership among teams of responsible public officials, with evidence from homicide investigations in Colombia. We randomly assigned the investigations of 66% of the 1,683 homicides occurring in Bogota, Colombia, during 2016 to a new investigation procedure emphasizing these features. We find a statistically significant 30% increase in the conviction rate in the treatment group relative to the control group. Indicators of the quality of the investigative process also improve, as well as the rate at which a formal accusation is presented before a court. Complementary findings suggest that the treatment produces well-coordinated teams that can communicate more fluently. Also, a survey of investigative team members reveal that work motivation, the extent to which they receive feedback on their performance, the pertinence and effectiveness of their roles, and the perceived quality and coordination of the team all improve under the new scheme.

Spanish Abstract: En agosto del 2019 se cumplieron dos anos de la reincorporacion de las Farc-EP. Este proceso es uno de los principales desafios de la implementacion del Acuerdo Final firmado entre el Estado colombiano y la organizacion guerrillera en noviembre de 2016. Los avances en materia de reincorporacion garantizaran su sostenibilidad. En este documento analizamos las actitudes de los exintegrantes frente al proceso en esta primera etapa, tomando los resultados del Registro Nacional de Reincorporacion (RNR), realizado entre la Agencia Nacional de Reincorporacion (ARN) y el componente Farc del Consejo Nacional de Reincorporacion (CNR). Tras mostrar que hay aspectos positivos en las actitudes de las personas en proceso de reincorporacion, y algunos que deben mirarse con preocupacion, estudiamos que caracteristicas de los exintegrantes y su entorno se asocian con mejores actitudes y condiciones para la implementacion del proceso de reincorporacion. Complementamos este analisis contrastando las actitudes de la poblacion en proceso de reincorporacion con las de la poblacion civil, haciendo paralelos, en terminos de los retos de politica publica, para ambos grupos. La evidencia presentada sirve para canalizar esfuerzos en donde mas parecen necesitarse. English Abstract: As of 2019, two years had passed since the demobilization of the Farc-EP. The reincorporation process of former combatants is one of the main challenges of implementating the Final Agreement signed between the Colombian state and the guerrilla organization in November 2016. Progress on reincorporation will ensure its sustainability. In this document we analyze the attitudes of former members of the Farc-EP with respect to this process during its early phases. To do so, we use the results of the National Reincorporation Registry (RNR), carried out between the National Reincorporation Agency (ARN) and the Farc component of the National Reincorporation Council (CNR). After showing that former members display positive attitudes towards their reincorporation process, and noting some others that raise concerns, we explore which characteristics of former members of the Farc-EP and their environment are associated with better attitudes and conditions for the implementation of this point of the peace agreement. We complement this analysis by contrasting activities of the population in the process of reincorporation with those of the civilian population, drawing parallels in terms of public policy challenges for both groups. The evidence presented in this document sheds light on possible future priorities to determine where efforts should be concentrated.

English Abstract: Research on deforestation has grown exponentially due to the availability of satellitebased measures of forest cover. One of the most popular is Global Forest Change (GFC). Using GFC, we estimate that the Colombian civil conflict increases ‘forest cover’. Using an alternative source that validates the same remote sensing images in the ground, we find the opposite effect. This occurs because, in spite of its name, GFC measures tree cover, including vegetation other than native forest. Most users of GFC seem unaware of this. In our case, most of the conflicting results are explained by GFC’s misclassification of oil palm crops as ‘forest’. Our findings call for caution when using automated classification of imagery for specific research questions. Spanish Abstract: La investigacion sobre la deforestacion ha crecido exponencialmente gracias a la disponibilidad de medidas satelitales de cobertura boscosa. Una de las fuentes mas populares es Global Forest Change (GFC). Utilizando GFC, estimamos que el conflicto civil colombianos incremento la ‘cobertura boscosa’. Utilizando una fuente de datos alternativa que valida los mismos datos de imagenes remotas en el campo, encontramos el efecto opuesto. Esto ocurre porque, a pesar de su nombre, GFC mide cobertura de arboles, incluyendo vegetacion distinta al bosque nativo. La mayoria de usuarios de GFC parecen ignorar esto. En nuestro caso, los resultados contradictorios se explican por los errores que GFC comete al clasificar cultivos de palma como ‘bosque’. Nuestros hallazgos demandan cautela al utilizar clasificaciones automaticas de imagenes satelitales para ciertas preguntas de investigacion.

Criminologists have long studied the relationship between economic conditions and crime. Empirical evidence is inconclusive, pointing at different directions. This may reflect the conflicting theoretical predictions on the relationship between these phenomena, but also the prevailing methodological choice which focuses on linear relationships even though nonlinearities are plausible theoretically. In this paper, we revisit the empirical relationship between economic conditions and crime by exploring potential nonlinearities. We look at flexible parametric specifications that include up to a cubic term of per capita income (or one dummy for each income quintile) and nonparametric and semi-parametric specifications (such as General Additive Models). Our results are robust to controlling for the standard socioeconomic, demographic, and policy determinants of crime, as well as to including a lagged dependent variable or state and time fixed effects. We document the existence of an inverted U-shaped relationship between crime and income within US states for the period 1970-2011. Crime increases with per capita income until it reaches a maximum, and then decreases as income keeps rising. This “Crime Kuznets Curve” (CKC) exists for property crime and for categories of violent crime that can be related to economic appropriation, like robbery, and is less robust for violent crimes not connected to economic incentives. We show that this pattern cannot be explained by correlated changes in economic inequality or by changes in law enforcement. In addition to providing robust evidence of the existence of a CKC, our findings lay the groundwork for studies exploring the underlying theoretical mechanisms. These should go beyond income inequality or law enforcement, and should explain why the results hold more clearly for property than for violent crime. Our findings and subsequent research to understand the underlying drivers are relevant for policy, as they suggest that violent conflict cannot be tackled solely by the trickle-down forces of economic growth.

Using Facebook's release in a given language as an exogenous source of variation in access to social media where the language is spoken, we show that Facebook has had a significant and sizable positive impact on citizen protests. By exploiting variation in a large sample of countries during close to 15 years and combining both aggregate and individual-level data, we confirm the external validity of previous research documenting this effect for specific contexts along a number of dimensions: geographically, by regime type, temporally, and by the socioeconomic characteristics of both countries and social media users. We find that \coordination" effects that rest on the \social" nature of social media play an important role beyond one-way information transmission, including a \liberation effect" produced by having a direct outlet to voice opinions and share them with others. Finally, we explore the broader political consequences of increased Facebook access, helping assess the welfare consequences of the increase in protests. On the negative side, we find no effects on regime change, democratization or governance. To explain this result, we show there are no effects on other political engagements, especially during critical periods, and that social media access also helps mobilize citizens against opposition groups, especially in less democratic areas. On the positive side, we find that Facebook access decreases internal conflict, with evidence that this reflects increased visibility deterring violence and that social media and the resulting protests help voice discontents that might otherwise turn more violent.

Spanish Abstract: La firma del acuerdo de paz colombiano resulto en la desmovilizacion y reincorporacion a la vida civil de mas de 12.000 excombatientes de las FARC. El conflicto, que estuvo activo casi 60 anos, causo mas de ocho millones de victimas y una sociedad dividida. No abordar estos legados sociales y psicologicos puede derivar en el resurgimiento de nuevos ciclos de violencia. Entender la disposicion de la poblacion civil a compartir la vida cotidiana con los excombatientes y su actitud hacia la reconciliacion es crucial para disenar politicas publicas que promuevan un posconflicto sostenible. Este articulo analiza las actitudes de la poblacion colombiana hacia las interacciones cotidianas con los excombatientes de las FARC y sus percepciones sobre la importancia y viabilidad del proceso de reconciliacion. Para esto, usamos una encuesta a una muestra de 4.497 hogares, representativa de los municipios mas afectados por el conflicto. Nuestro analisis explora como estas actitudes y percepciones se relacionan con tres dimensiones: (i) las experiencias de violencia vividas durante el conflicto; (ii) la confianza hacia el sistema judicial, la policia y el ejercito; y (iii) las conexiones con redes politicas y comunitarias. Los resultados indican que los legados de violencia estan asociados con actitudes pesimistas hacia la reconciliacion. Sin embargo, las personas que viven en territorios altamente afectados por la violencia parecen estar dispuestas a compartir las actividades cotidianas con los excombatientes. Mayores niveles de confianza en instituciones como el sistema judicial, la policia y el ejercito, asi como la participacion en organizaciones comunitarias y las conexiones con redes politicas, estan correlacionadas con actitudes mas favorables hacia la reconciliacion. Estos resultados indican que las intervenciones para promover la reconciliacion durante el posconflicto deben tener en cuenta la heterogeneidad en las experiencias de violencia, las necesidades y las posiciones politicas en estos municipios. English Abstract: The Colombian peace agreement resulted in the demobilization and reintegration of 12,000 FARC ex-combatants. The sixty years internal conflict left eight million victims and a divided society. Failure to address these social and psychological legacies may end up in the resurgence of new violence cycles. Understanding the willingness of civilians to share daily life with ex-combatants and their attitudes towards reconciliation is crucial to design public policies that promote a sustainable post-conflict. Using a sample of 4,500 households in regions heavily affected by the civil conflict, we study the attitudes of civilians towards every day interactions with former combatants and their perceptions on the importance and feasibility of the reconciliation process. Our analysis studies how the attitudes of reconciliation are associated with three dimensions: (i) experiences of violence people faced during conflict; (ii) trust towards the judicial system, the army and the police; and (iii) connections with political and social networks. Our findings show that legacies of violence are associated with a pessimistic outlook towards reconciliation. Nevertheless, people who lived in regions with a high intensity of conflict are more willing to share daily activities with former combatants. People with higher trust towards the judicial system, the police and the army have a more optimistic outlook towards reconciliation. Also, more participation in community organizations and stronger connection to political networks is positively correlated with more positive attitudes towards reconciliation. Interventions to promote reconciliation in the post-conflict period need to take into account the heterogeneous experiences of violence, needs and political positions in these municipalities.

We describe the patterns of economic growth and social progress in Colombian “functional territories”. Unlike political/administrative divisions that emerge at least partly for historical reasons unrelated to economic interactions, functional territories reflect the patterns of spatial agglomeration and economic interactions in a territory. Using a novel definition of functional territories, our analysis reveals significant fragmentation of economic interactions: close to 66% of municipalities (holding about 20% of the country’s population) have no significant links to neighboring areas. A set of comparatively more (but still only partially) integrated and more populous municipalities have stronger links between them. This “rural-urban” space holds just around 31% of total population. The rest of Colombians are in “urban” or “Metropolitan” highly-populated and more integrated clusters. We describe these territories along two dimensions: economic growth or “dynamism” and progress in social indicators or “inclusion”. To do so we propose a simple conceptual framework that organizes the diverse inputs that might help boost these outcomes. Larger and more urbanized agglomerations exhibit visible advantages in these inputs. Moreover, long-run institutional determinants best help differentiate territories. Consistent with this, larger and more urbanized agglomerations have better outcomes, especially when measuring economic activity. Also, more dynamic places tend to be the more inclusive ones, even though recent improvements in dynamism do not correlate with improvements in inclusion.

Medical and public health innovations in the 1940s quickly resulted in significant health improvements around the world. Countries with initially higher mortality from infectious diseases experienced greater increases in life expectancy, population, and -- over the following 40 years -- social conflict. This result is robust across alternative measures of conflict and is not driven by differential trends between countries with varying baseline characteristics. At least during this time period, a faster increase in population made social conflict more likely, probably because it increased competition for scarce resources in low income countries.

What determines the extent of electoral fraud? This paper constructs a model of the tradeoff between fraud and policy concessions (public good provision) which also incorporates the strength of the state. In addition, we parameterize the extent to which economic elites (to whom fraud is costly) and political elites (to whom fraud is advantageous) “overlap.” The model predicts that fraud will be lower and public good provision higher when land inequality is higher, the overlap between elites lower, and the strength of the state higher. We test these predictions using a unique, municipal-level dataset from Colombia's 1922 Presidential elections. We find empirical support for all the predictions of the model.

Exchanging one's vote for particularistic benefits - practices usually grouped under 'clientelism' - is often thought to weaken programmatic links between citizens and politicians and disincentivize public good provision, as well as undermine voter autonomy and the ideal role of elections. However, empirically analyzing this key phenomenon for the working of democracies entails formidable challenges. We conduct list experiments on a large sample of households to estimate the incidence of clientelistic vote buying, as well as the extent to which respondents refrain from openly recognizing this behavior. Nearly one out of every five respondents engage in clientelism and, surprisingly, they do not feel ashamed to admit it. Using the literature to guide our analysis, we examine the robust correlates of clientelism, finding that vote buying increases with poverty, reciprocity, disregard for the rule of law and, challenging several theories, interest in politics.

We describe some features of the political environment in Colombia, drawing from a unique panel dataset of about 10,000 households. Contrasting responses in 2013 and 2016, we document a persistent lack of interest in politics and prevailing clientelism, with personalistic links dominating partisan affinity. Engagement in clientelistic vote buying, instead, is quite variable in time, with households getting into and out of these exchanges. Rejecting the simplest and more optimistic theories of modernization, we do not find that increases in household wealth correlate with the abandonment of clientelism. Instead, changes in the weakness of the state (as proxied with tax evasion) correlate strongly with changes in clientelism. Strengthening the state therefore seems a priority. Viewing peace-building efforts as one key step in this direction naturally leads to the examination of the attitudes towards the recent peace process between the government and the Farc, Colombia's largest guerrilla group. With a special set of questions included in 2016, we also study households' perspectives on this topic. The data reveals a rare combination of indifference and polarization towards the peace process. A large share of people feel the peace process implies no substantial changes for their lives, and those that do are approximately equally divided between those expecting positive and negative changes. Those who live in areas in which non-state armed groups were present are relatively less indifferent, yet they are not simply more pessimistic or optimistic. Most respondents report no discomfort with having former rebels as neighbors or employees, but they do reject political participation and financing benefits for rebels (two key aspects of the peace treaty) comparatively more.

Tax evasion lies at the core of the relationship between citizens and the state: it reflects the level of trust in the state and compliance with society’s implicit ‘social contract’. However, empirically analyzing it is challenging, with few direct and reliable measures. This has hampered the advancement of the theoretical and empirical literature, which is especially underdeveloped in the case of indirect tax evasion. We conduct list experiments on a large sample of households to estimate the incidence of value added tax (VAT) evasion, as well as the extent of social desirability bias in respondent answers. Around 20% of respondents engage in evasion and, surprisingly, they are not ashamed to recognize this openly. Evasion is more prevalent in places with more informality and less physical presence of the state, as well as among poorer, less educated individuals, and those who disregard the rule of law.

How should a state which lacks the monopoly of violence go about acquiring it? We investigate the use of high-powered incentives for members of the Colombian army as part of a strategy to combat left-wing guerillas and build the state's monopoly of violence. We show that this top-down state-building effort produced several perverse side effects. Innocent civilians were killed and misrepresented as guerillas (a phenomenon known in Colombia as `false positives'). Exploiting the fact that Colombian colonels have stronger career concerns and should be more responsive to such incentives, we show that there were significantly more false positives during the period of high-powered incentives in municipalities where a higher share of brigades were commanded by colonels and in those where checks coming from civilian judicial institutions were weaker. We further find that in municipalities with a higher share of colonels, the period of high-powered incentives coincided with a worsening of local judicial institutions and the security situation, with more frequent attacks not just by the guerillas but also by paramilitaries.

Among the fundamental causes of long-run economic performance, differences in ‘institutions’ have received considerable attention in recent years. At the same time, a large body of theoretical and empirical work shows that financial development can have a big effect on economic performance. This raises the more fundamental question as to why some countries have developed financial markets while others do not. This paper reviews the theoretical and empirical research on this issue and shows that one of the channels whereby better institutions may have an effect on economic development is through the consolidation of larger and better financial markets. An issue that is left aside in this paper relates to what regulations and policies lead to better functioning capital markets. At some level, one can think of regulations and policies as particular types of institutions. Nonetheless, institutional problems are deeper causes leading to poor economic performance; bad policies might simply be part of the channels through which they influence performance. Thus, addressing the question of what determines the emergence of ‘good’ institutions – i.e. institutions that promote financial development – seems particularly important. Recent research providing some answers to this question is also reviewed.

During the 1990s, the performance of several emerging economies was linked to their access to foreign capital. Colombia was no exception, experiencing a boom and bust cycle associated with an initial period of real exchange rate appreciation followed by a sharp depreciation. Although several studies have discussed the recent underperformance of the Colombian economy, few attempts have been made at analyzing firm-level data. We rely on information for a large sample of firms during 1995–2001 and examine the determinants of foreign indebtedness and the effects on firm performance of holding dollar debt amid real depreciations (i.e. the so-called ‘balance sheet effect’). In our data set, matching does seem to take place to the extent that firms in more open sectors and exporting firms have higher shares of dollar debt. Our estimations also reveal a negative balance sheet effect on firms’ profitability, while the effect on investment is generally not significant.

English Abstract: We document the existence of a Crime Kuznets Curve in US states since the 1970s. As in come level shave risen, crime has followed an inverted U-shaped pattern, first increasing and then dropping. The Crime Kuznets Curve is not explained by income inequality. In fact, we show that during the sample period inequality has risen monotonically with income, ruling out the traditional Kuznets Curve. Our finding is robust to adding a large set of controls that are used in the literature to explain the incidence of crime, as well as to controlling for state and year fixed effects. The Curve is also revealed in nonparametric specifications. The Crime Kuznets Curve exists for property crime and for some categories of violent crime.Spanish Abstract: Demostramos la existenciade una Curva de Kuznets del Crimenenlos Estados Unidosdes de 1970. A medida que los niveles de ingreso han aumentado, el crimen ha seguido una trayectoria de U invertida, incrementandose inicialmente y despues cayendo. La Curvade Kuznets del crimen no esta explicada por la desigualdad del ingreso. De hecho, durante nuestro periodo muestral, la desigualdad ha crecido de forma monotona con el ingreso, descartando la presencia de una Curva de Kuznets tradicional. Nuestro resultado es robusto a la inclusion de un conjunto grande de controles usados frecuentemente en la literatura para explicar la incidencia del crimen, ademas de efectos fijos de estado y ano. La Curva es tambien evidente en especificaciones no parametricas. La Curva de Kuznets del Crimen existe para crimenes contra la propiedad y algunas categorias de crimen violento.

Despite a growing body of literature on how environmental degradation can fuel civil war, the reverse effect, namely that of conflict on environmental outcomes, is relatively understudied. From a theoretical point of view this effect is ambiguous, with some forces pointing to pressures for environmental degradation and some pointing in the opposite direction. Hence, the overall effect of conflict on the environment is an empirical question. We study this relationship in the case of Colombia. We combine a detailed satellite-based longitudinal dataset on forest cover across municipalities over the period 1990-2010 with a comprehensive panel of conflict-related violent actions by paramilitary militias. We first provide evidence that paramilitary activity significantly reduces the share of forest cover in a panel specification that includes municipal and time fixed effects. Then we confirm these findings by taking advantage of a quasi-experiment that provides us with an exogenous source of variation for the expansion of the paramilitary. Using the distance to the region of Urabá, the epicenter of such expansion, we instrument paramilitary activity in each cross-section for which data on forest cover is available. As a falsification exercise, we show that the instrument ceases to be relevant after the paramilitaries largely demobilized following peace negotiations with the government. Further, after the demobilization the deforestation effect of the paramilitaries disappears. We explore a number of potential mechanisms that may explain the conflict-driven deforestation, and show evidence suggesting that paramilitary violence generates large outflows of people in order to secure areas for growing illegal crops, exploit mineral resources, and engage in extensive agriculture. In turn, these activities are associated with deforestation.

Free media may not favor political accountability when other democratic institutions are weak, and may even bring undesirable unintended consequences. We propose a simple model in which politicians running for office may engage in coercion to obtain votes. A media scandal that exposes these candidates increases their coercion effort to offset the negative popularity shock.This may result in the tainted politicians actually increasing their vote share. We provide empirical evidence from one recent episode in the political history of Colombia, the 'parapolitics' scandal featuring politicians colluding with illegal armed paramilitary groups to obtain votes.We show that colluding candidates not only get more votes than their clean competitors, but also concentrate them in areas where coercion is more likely (namely, areas with more paramilitary presence, less state presence, and more judicial inefficiency). Harder to reconcile with other explanations and as a direct test of the effects of media exposure, we compare tainted candidates exposed before elections to those exposed after. We find that those exposed before elections get as many votes as those exposed once elected, but their electoral support is more strongly concentrated in places where coercion is more likely. Our results highlight the complementarity between different dimensions of democratic institutions.

This paper studies the effect of strengthening democracy, as captured by an increase in voting rights, on the incidence of violent civil conflict in nineteenth-century Colombia. Empirically studying the relationship between democracy and conflict is challenging, not only because of conceptual problems in defining and measuring democracy, but also because political institutions and violence are jointly determined. We take advantage of an experiment of history to examine the impact of one simple, measurable dimension of democracy (the size of the franchise) on conflict, while at the same time attempting to overcome the identification problem. In 1853, Colombia established universal male suffrage. Using a simple difference-indifferences specification at the municipal level, we find that municipalities where more voters were enfranchised relative to their population experienced fewer violent political battles while the reform was in effect. The results are robust to including a number of additional controls. Moreover, we investigate the potential mechanisms driving the results. In particular, we look at which components of the proportion of new voters in 1853 explain the results, and we examine if results are stronger in places with more political competition and state capacity. We interpret our findings as suggesting that violence in nineteenth-century Colombia was a technology for political elites to compete for the rents from power, and that democracy constituted an alternative way to compete which substituted violence.

We develop a political economy model where some politicians have a comparative advantage in undertaking a task and this gives them an electoral advantage. This creates an incentive to underperform in the task in order to maintain their advantage. We interpret the model in the context of fighting against insurgents in a civil war and derive two main empirical implications which we test using Colombian data during the presidency of Álvaro Uribe. First, as long as rents from power are sufficiently important, large defeats for the insurgents should reduce the probability that politicians with comparative advantage, President Uribe, will fight the insurgents. Second, this effect should be larger in electorally salient municipalities. We find that after the three largest victories against the FARC rebel group, the government reduced its efforts to eliminate the group and did so differentially in politically salient municipalities. Our results therefore support the notion that such politicians need enemies to maintain their political advantage and act so as to keep the enemy alive.

Rural areas often have more than one regime of property rights and production. Large, private-property farms owned by powerful landowners coexist with subsistence peasants who farm small plots with limited property rights. At the same time, there is broad consensus that individual, well-specified and secure property rights over land improve economic outcomes. If property rights in land are so beneficial, why are they not adopted more widely? I put forward a theory according to which politically powerful landowners choose weak property rights to impoverish peasants and force them to work for low wages. Moreover, because weak property rights force peasants to stay in the rural sector protecting their property, the incentives to establish poor property rights are especially salient when peasants can migrate to an alternative sector, such as when urban wages increase with industrialization.

This paper examines the role of mass media in countering special interest group influence. I use the concentration of campaign contributions from Political Action Committees to proxy special interests’ capture US Senate candidates from 1980 to 2002, and compare the reaction of voters to increases in concentration in two different types of media markets – in-state media markets and out-of-state media markets. Unlike in-state media markets, out-of-state markets focus on neighboring states’ politics and elections. Thus, if citizens punish political capture, increases in concentration of special interest contributions to a particular candidate should reduce his vote share in in-state counties relative to the out-of-state counties, where the candidate receives less coverage. I find that a one standard deviation increase in concentration of special interest contributions to incumbents reduces their vote share by about 0.5 to 1.5 percentage points in in-state counties relative to the out-of-state counties. Results are similar in specifications that rely solely on variation in concentration across time within the same county, and when the sample is limited to in-state counties that are contiguous to out-of-state counties and have similar demographic structures. A placebo test where in-state counties bordering out-of-state ones are compared to other in-state counties shows no effect, confirming the identification hypothesis that the results are not driven by geographic characteristics or distance from the media center of the state.

This paper constructs measures of the extent of ballot stuffing (fraudulent votes) and electoral coercion at the municipal level using data from Colombia's 1922 Presidential elections. Our main findings are that the presence of the state reduced the extent of ballot stuffing, but that of the clergy, which was closely imbricated in partisan politics, increased coercion. We also show that landed elites to some extent substituted for the absence of the state and managed to reduce the extent of fraud where they were strong. At the same time, in places which were completely out of the sphere of the state, and thus partisan politics, both ballot stuffing and coercion were relatively low. Thus the relationship between state presence and fraud is not monotonic.

La explicacion del ciclo economico fue uno de los intereses principales de los economistas en la primera mitad del siglo XX. Tal empeno dejo de ser prioritario en la agenda de la profesion entre fines de la segunda guerra mundial y el advenimiento del primer choque sobre los precios petroleros a mediados de los setenta. Desde entonces el ciclo economico volvio a ocupar una posicion prominente en la investigacion economica. Este ensayo destaca grandes lineas de investigacion sobre el ciclo emprendidas a lo largo del siglo, se cita la controversia acerca de los eventuales cambios del ciclo en la segunda parte de la centuria anterior, y se introduce la discusion de los vinculos entre ciclos de diferentes economias. Este ultimo topico sirve de introduccion al tema de las correlaciones entre ciclos de economias, y a su aplicacion a las posibles correlaciones entre los Estados Unidos y Colombia durante el ultimo siglo.

La explicación del ciclo económico fue uno de los intereses principales de los economistas en la primera mitad del siglo XX. Tal empeño dejó de ser prioritario en la agenda de la profesión entre fines de la segunda guerra mundial y el advenimiento del primer choque sobre los precios petroleros a mediados de los setenta. Desde entonces el ciclo económico volvió a ocupar una posición prominente en la investigación económica. Este ensayo destaca grandes líneas de investigación sobre el ciclo emprendidas a lo largo del siglo, se cita la controversia acerca de los eventuales cambios del ciclo en la segunda parte de la centuria anterior, y se introduce la discusión de los vínculos entre ciclos de diferentes economías. Este último tópico sirve de introducción al tema de las correlaciones entre ciclos de economías, y a su aplicación a las posibles correlaciones entre los Estados Unidos y Colombia durante el último siglo.