Colonial Migration and the Origins of Governance

Transcription

1 Colonial Migration and the Origins of Governance Theory and Evidence from Java Thomas B. Pepinsky Department of Government Cornell University February 13, 2015 Pepinsky (Cornell) Governance in Java February 13, / 39

2 Overview Motivating questions: Where does governance come from? Why and how does it vary? Pepinsky (Cornell) Governance in Java February 13, / 39

3 Overview Motivating questions: Where does governance come from? Why and how does it vary? Motivating problem: Local economic governance matters for millions of Indonesians Pepinsky (Cornell) Governance in Java February 13, / 39

4 Overview Motivating questions: Where does governance come from? Why and how does it vary? Motivating problem: Local economic governance matters for millions of Indonesians Pepinsky (Cornell) Governance in Java February 13, / 39

5 Overview Motivating questions: Where does governance come from? Why and how does it vary? Motivating problem: Local economic governance matters for millions of Indonesians My contribution: Colonial social structures Social exclusion of trading minorities in the colonial era accommodative local economic governance today Pepinsky (Cornell) Governance in Java February 13, / 39

6 Informal Institutions and Governance Problem: Trade and exchange without property rights Solution: Two kinds of strategies Internal: ethnic ties (Greif, Landa, Fearon/Laitin) External: personal, informal networking and collaboration with political elites Pepinsky (Cornell) Governance in Java February 13, / 39

7 Informal Institutions and Governance Problem: Trade and exchange without property rights Solution: Two kinds of strategies Internal: ethnic ties (Greif, Landa, Fearon/Laitin) External: personal, informal networking and collaboration with political elites Elites provide rights and protection for in exchange for preferential access to commodities, taxes and tribute, etc. Pepinsky (Cornell) Governance in Java February 13, / 39

8 When? A Typology of External Relations Distinguish competition (Jha 2013) and social distance Low Social Distance High Social Distance Non-Competitive Arabs in East Africa Jews in Medieval Europe Muslims in Indian Port Cities Competitive Arabs in Java Chinese in Philippines and Thailand Lebanese/Syrians in Latin America Chinese in Java Indians in East Africa Lebanese/Syrians in West Africa Pepinsky (Cornell) Governance in Java February 13, / 39

9 When? A Typology of External Relations Distinguish competition (Jha 2013) and social distance Non-competitive Competitive Low social distance N/A In-group solidarity High social distance Civic institution Elite linkages Pepinsky (Cornell) Governance in Java February 13, / 39

10 When? A Typology of External Relations Distinguish competition (Jha 2013) and social distance Low Social Distance Non-Competitive N/A Competitive In-group solidarity High Social Distance Civic Institutions Elite linkages (cf. outgroup restraint ) Pepinsky (Cornell) Governance in Java February 13, / 39

11 The Colonial Economy of Java Plural economy three kinds of people recognized under colonial law 1. so-called natives or indigenous people (Inlander) 2. Europeans and assimilated persons 3. foreign Easterners : Chinese and Others (andere vreemde Oosterlingen) Pepinsky (Cornell) Governance in Java February 13, / 39

12 The Colonial Economy of Java Plural economy three kinds of people recognized under colonial law 1. so-called natives or indigenous people (Inlander) 2. Europeans and assimilated persons 3. foreign Easterners : Chinese and Others (andere vreemde Oosterlingen) Two observations 1. Common economic position of foreign Easterners: traders, middlemen, intermediaries, petty financiers (more on this later...) 2. Important social distinction between Chinese and Arabs in Java Pepinsky (Cornell) Governance in Java February 13, / 39

13 Illustration: Colonial Era Modjokuto (Geertz 1963) wong tjina, wong dagang, wong cilik, priyayi the Chinese, almost without exception, were traders the leading figures [among the wong dagang]...were pious Muslims (some of them were actually of Arab descent) Pepinsky (Cornell) Governance in Java February 13, / 39

14 Illustration: Contemporary Era Former Jakarta Governor (current President) Joko Widodo with Vice-Governor Basuki Tjahaya Purnama (a.k.a. Tjong Ban Hok) Banten Gubernatorial candidate Zulkieflimansyah with Vice-Governor candidate Marissa Haque Pepinsky (Cornell) Governance in Java February 13, / 39

15 Illustration: Contemporary Era What are the differences between Marissa Haque and...ahok?... They both are candidates to be Vice Governor (Banten and Jakarta). Marissa openly notes that her grandfather, Siraj Ul Haque, comes from Uttar Pradesh. In fact...grandfather was an Indian, while [on the other side] her father was Pakistani. But no problem. Marissa Haque is still an Indonesian. Compare Marissa with Ahok. Over and over again, Ahok emphasizes that he is Indonesian. He has to struggle to get people to even recognize that. - Marching (2012), Koran Tempo Pepinsky (Cornell) Governance in Java February 13, / 39

16 When? A Typology of External Relations Low Social Distance Non-Competitive N/A Competitive In-group solidarity High Social Distance Civic Institutions Elite linkages (cf. outgroup restraint ) Solution to colonial-era problem: elite linkages as a substitute for property rights. Pepinsky (Cornell) Governance in Java February 13, / 39

17 Vignettes: In-Group Solidarity Sarekat Islam founded as Sarekat Dagang Islamiah (Islamic Traders Association), heavily influenced by Hadramis Media Education Pepinsky (Cornell) Governance in Java February 13, / 39

18 Vignettes: Elite Linkages Opium To compete successfully the opium farm Chinese had to make their influence felt at every level in the village, in the residency capital, and in Batavia. Doing so meant accommodating to the power and ways of the village world, as well as to the priyayi [local Javanese court elites] administrators who presided over it, and to the Dutch Colonial Service.... It also meant exploiting the institutions that welded these diverse elements together, one of the most important of which was the colonial court system...the integration of elite Chinese, Javanese, and Dutch interests was among the key institutional features of its plural society Pepinsky (Cornell) Governance in Java February 13, / 39

19 Vignettes: Elite Linkages NV Handelmaatschappij Kwik Hoo Tong Trust and personal relations regulated KHT s dealings with the Bank of Java and the other large Dutch financial institutions. During the 1910s and 1920s, when Kwik Djoeng Eng was in Semarang, he visited the Bank of Java s branch office almost three times a week. He dined with the bank s agents, sweet-talking and cajoling them. Most of the time, these agents would send favourable reports to the directors urging them to enhance credit facilities and to show some consideration when KHT was not able to repay its debt on time Pepinsky (Cornell) Governance in Java February 13, / 39

20 Vignettes: Elite Linkages Liem Ing Hwee This talented man soon became popular among the city s inhabitants, including the Chinese, European and Javanese residents, and enjoyed close ties with the Sultan...He held important positions as president of various social, political and economic organisations, of which Siang Hwee was the most prestigious. Pepinsky (Cornell) Governance in Java February 13, / 39

21 General Empirical Strategy Chinese settlement in the past elite linkages in the past accommodative economic governance in the past accommodative economic governance today Pepinsky (Cornell) Governance in Java February 13, / 39

22 General Empirical Strategy Chinese settlement in the past elite linkages in the past accommodative economic governance in the past accommodative economic governance today Pepinsky (Cornell) Governance in Java February 13, / 39

23 Capturing Social Exclusion Migrant population density of colonial administrative units from the 1930 Census of the Netherlands Indies (Volkstelling 1930) Administrative Divisions in Java: Colonial Indonesian U.S. Equivalent Provincie or Gouvernement Propinsi State Residentie Regentschaap Kabupaten or Kota County District Kecamatan Township Match Regentschaap to kabupaten/kota where possible, use District where necessary Pepinsky (Cornell) Governance in Java February 13, / 39

24 Migrants in 1930 Pepinsky (Cornell) Governance in Java February 13, / 39

25 Measuring Economic Governance: Concepts Accommodative economic governance: government actions/policies/regulations/etc. not interfering with firms objectives partial, not impartial May be normatively objectionable Pepinsky (Cornell) Governance in Java February 13, / 39

26 Measuring Economic Governance: Concepts Accommodative economic governance: government actions/policies/regulations/etc. not interfering with firms objectives partial, not impartial May be normatively objectionable Economic Governance Index (EGI) = first principal component of 40+ governance indicators from KPPOD and the Asia Foundation (McCulloch 2011) NB: first component corresponds to above definition Pepinsky (Cornell) Governance in Java February 13, / 39

27 Measuring Economic Governance: Concepts Accommodative economic governance: government actions/policies/regulations/etc. not interfering with firms objectives partial, not impartial May be normatively objectionable Pepinsky (Cornell) Governance in Java February 13, / 39

28 A quick look 5 0 EGI Province Central Java East Java West Java Yogyakarta Difference in Migrant Densities, Chinese vesus Other Foreign Easterners Pepinsky (Cornell) Governance in Java February 13, / 39

29 Model to be Estimated EGI = α + β 1 CHI β 2 OFE β 3 EUR γx + δd + ɛ where CHI 1930 = log percent Chinese in 1930 OFE 1930 = log percent other foreign Easterners in 1930 EUR 1930 = log percent Europeans in 1930 X = demographic, economic, geographic controls D = provincial fixed effects Pepinsky (Cornell) Governance in Java February 13, / 39

30 Results (1) Other Asians Per 1000 Citizens (1930) -0.52* (0.18) Europeans Per 1000 Citizens (1930) (0.22) Chinese Per 1000 Citizens (1930) 0.87* (0.43) Sec. Enrol. Rate (2001) -4.62* (1.39) Urban (0.80) Constant (1.16) Observations 98 OLS with bootstrapped standard errors in parentheses. Province fixed effects suppressed for presentation. = p <.05. Pepinsky (Cornell) Governance in Java February 13, / 39

31 Inferential Hurdles How to interpret this correlation between settlement in 1930 and economic governance today? Colonial social exclusion (my preferred explanation), but also Pepinsky (Cornell) Governance in Java February 13, / 39

32 Inferential Hurdles How to interpret this correlation between settlement in 1930 and economic governance today? Colonial social exclusion (my preferred explanation), but also Chineseness? Confucianism? Sorting? Human capital? Pepinsky (Cornell) Governance in Java February 13, / 39

33 Inferential Hurdles How to interpret this correlation between settlement in 1930 and economic governance today? Colonial social exclusion (my preferred explanation), but also Chineseness? Confucianism? Sorting? Human capital? Rely on design and argument to dismiss these. Briefly, Chinese population today does not predict governance No evidence of selective migration by Chinese, not Arabs Even allowing for selection, results are qualitatively robust in a Rosenbaum-style bounding exercise Arabs and Chinese performed remarkably similar functions in the colonial economy Pepinsky (Cornell) Governance in Java February 13, / 39

34 Mechanisms of Persistence: Two Cases Pepinsky (Cornell) Governance in Java February 13, / 39

35 Mechanisms of Persistence: Two Cases Chinese enterprise in Semarang, Central Java Djohar Market Traders Association Tiong Hwa Siang Hwee to Siang Hwee or KADIN? Pepinsky (Cornell) Governance in Java February 13, / 39

36 Mechanisms of Persistence: Two Cases Chinese enterprise in Semarang, Central Java Djohar Market Traders Association Tiong Hwa Siang Hwee to Siang Hwee or KADIN? Chinese enterprise in Surabaya, East Java Siang Hwee KADIN! Pepinsky (Cornell) Governance in Java February 13, / 39

37 So What? Deep Origins of Economic Outcomes Pepinsky (Cornell) Governance in Java February 13, / 39

38 So What? Deep Origins of Economic Outcomes Reduced form results for district-level economic outcomes: 1. Per capita expenditure ( 07) (+) 2. Non-oil/gas manufacturing share/gdp ( 06) (+) 3. Agricultural share/gdp ( 06) ( ) 4. Industry value added ( 07) (+) 5. Firm investment ( 07) (+) 6. Number of firms ( 07) (+) 7. Per capital development expenditure ( 06) ( ) Pepinsky (Cornell) Governance in Java February 13, / 39

39 So What? Deep Origins of Good Governance? Pepinsky (Cornell) Governance in Java February 13, / 39

40 So What? Deep Origins of Good Governance? Reduced form results for district-level, citizen-focused governance outcomes (all 2008): 1. Flash floods (0) 2. Deaths from flash floods (0) 3. Asphalt Roads (0) 4. Quality of Roads (0) 5. Mass violence (+) 6. Robbery (+) 7. Thieving (+) 8. Exploitation (+) Pepinsky (Cornell) Governance in Java February 13, / 39

41 Conclusions and Implications 1. Colonial origins of comparative development (Acemoglu and colleagues) 2. Ethnicity and informal institutions (Greif, Landa, and others) 3. Social capital and democratic performance (Putnam in Italy) Pepinsky (Cornell) Governance in Java February 13, / 39

42 Colonial Origins Colonial origins extractive institutions or inclusive institutions Pepinsky (Cornell) Governance in Java February 13, / 39

43 Colonial Origins Colonial origins extractive institutions or inclusive institutions My contribution: 1. What are the everyday responses to extractive institutions? 2. Can we study them in a principled manner? 3. Do they shape long-term outcomes? Pepinsky (Cornell) Governance in Java February 13, / 39

44 Ethnicity and Institutions Avner Greif, Janet Landa, many others: What is the internal logic of trade and exchange? Pepinsky (Cornell) Governance in Java February 13, / 39

45 Ethnicity and Institutions Avner Greif, Janet Landa, many others: What is the internal logic of trade and exchange? My intervention (see also Jha 2013): The external strategy is interesting and consequential Pepinsky (Cornell) Governance in Java February 13, / 39

46 Social / Historical Origins of Democratic Performance Putnam: historical/informal origins of democratic performance in modern Italy Pepinsky (Cornell) Governance in Java February 13, / 39

47 Social / Historical Origins of Democratic Performance Putnam: historical/informal origins of democratic performance in modern Italy My perspective: 1. History matters, but former colonies have different foundational moments 2. Precision over parsimony no Pangloss 3. Critical juncture: the creation of market relations? Pepinsky (Cornell) Governance in Java February 13, / 39

48 Colonial Migration and the Origins of Governance Thank you! Pepinsky (Cornell) Governance in Java February 13, / 39

49 Extras: Measuring Economic Governance: Concepts Normative theories of good economic governance: the norms of limited government that protect private property from predation by the state (Kaufmann) impartiality in the exercise of public authority (Rothstein and Teorell) Pepinsky (Cornell) Governance in Java February 13, / 39

50 Extras: Measuring Economic Governance: Concepts Normative theories of good economic governance: the norms of limited government that protect private property from predation by the state (Kaufmann) impartiality in the exercise of public authority (Rothstein and Teorell) Contrast with accommodative economic governance: government actions/policies/regulations/etc. not interfering with firms objectives partial, not impartial May be normatively objectionable! Pepinsky (Cornell) Governance in Java February 13, / 39

51 Extras: Measuring Economic Governance: Measures Exploratory factor analysis of 40+ governance indicators (KPPOD and the Asia Foundation, McCulloch (2011)) Natural cluster of loadings on first principal component Indicator Loading Interaction: Obstacle or Impact on Firm Performance 0.24 Information Access: Obstacle or Impact on Firm Performance 0.25 Regent/Mayor Integrity: Impact on Firm Performance 0.25 Infrastructure: Obstacle or Impact on Firm Performance 0.26 Land Access: Obstacle or Impact Impact on Firm Performance 0.26 Security and Problem Solving: Obstacle or Impact on Firm Performance 0.26 Transaction Costs: Obstacle or Impact on Firm Performance 0.28 Licensing: Obstacle or Impact on Firm Performance 0.28 Economic Governance Index (EGI) = first principal component NOTE: definition entails conceptualization of accommodative rather than good economic governance Pepinsky (Cornell) Governance in Java February 13, / 39

52 Extras: Other Indicators Eigenvalue EGI Component Pepinsky (Cornell) Governance in Java February 13, / 39

53 Extras: Chinese Population 1930 vs Chinese per 1000 (2000), log scale Chinese per 1000 (1930), log scale Pepinsky (Cornell) Governance in Java February 13, / 39

54 Extras: Chinese Population 1930 vs Table 4: Main Results Independent Variables Model 1 Model 2 Model 3 Model CHINESE PER 1000 CITIZENS (1930) (2.02) (2.13) (2.24) OTHER ASIANS PER 1000 CITIZENS (1930) (-2.88) (-2.65) (-2.57) EUROPEANS PER 1000 CITIZENS (1930) (0.11) (0.01) (0.10) SEC. ENROL. RATE (2001) (-3.30) (-2.37) (-2.71) (-1.48) URBAN (-1.91) (-2.24) (-3.39) (-2.59) 0.15 OTHER ASIANS PER 1000 CITIZENS (2000) (0.97) (0.52) (-0.08) FOREIGNERS PER 1000 CITIZENS (2000) (0.15) (0.42) (0.077) CHINESE PER 1000 CITIZENS (2000) (-0.03) (-0.16) (1.11) LN GRDP PER CAPITA (2001) (-0.88) (1.23) (-0.94) GROWTH (2001-7) (-1.31) (-0.62) (-1.23) LN GRDP (2001) (-2.59) MINING/GRDP (2001) (-0.06) CONSTANT (-0.73) (0.81) (1.96) (1.01) Province Fixed Effects Yes Yes Yes Yes Observations Each model is an OLS regression with bootstrapped standard errors. The dependent variable for each model is EGI (see the text for a description). The parentheses contain Z statistics. Pepinsky (Cornell) Governance in Java February 13, / 39

55 Extras: Extensions Table 5: Extensions Independent Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 CHINESE PER 1000 CITIZENS (1930) (2.89) (2.90) (2.81) (1.92) (2.50) (2.11) (2.06) (2.18) OTHER ASIANS PER 1000 CITIZENS (1930) (-2.80) (-2.83) (-2.73) (-1.18) (-0.61) (-0.37) (-0.63) (-0.10) EUROPEANS PER 1000 CITIZENS (1930) (-0.64) (-1.07) (-0.98) (-1.28) (-0.93) (-0.81) (-0.48) (-1.31) SEC. ENROL. RATE (2001) (-3.19) (-2.48) (-2.61) (-1.95) (-1.43) (-1.70) URBAN (0.27) (-0.41) (-1.39) (0.14) (0.59) (0.48) (-0.32) (0.83) OTHER ASIANS PER 1000 CITIZENS (2000) (0.75) (0.53) (-0.18) (-0.24) FOREIGNERS PER 1000 CITIZENS (2000) (0.85) (1.11) (0.70) (0.89) CHINESE PER 1000 CITIZENS (2000) (-1.07) (-0.89) (-0.41) (-0.27) LN GRDP PER CAPITA (2001) (0.070) (1.30) (-0.50) (0.87) GROWTH (2001-7) (-0.76) (-0.44) (-0.40) (-0.13) LN GRDP (2001) (-1.40) (-1.56) MINING/GRDP (2001) (-0.23) (-0.18) CONSTANT (-1.87) (-0.28) (0.52) (-0.96) (0.42) (1.16) (-3.87) Province Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Observations Methods as for Table 4. The variables OTHER ASIANS PER 1000 CITIZENS (1930), EUROPEANS PER 1000 CITIZENS (1930), and CHINESE Pepinsky (Cornell) Governance in Java February 13, / 39

56 Extras: Human Capital, Industriousness, etc.? Table 2: Occupations for Chinese and Other Foreign Easterners Occupational Group English Description Chinese Others I. Oerproductie Farming, fishing, mining, etc II. Nijverheid Industry III. Verkeerswezen Transportation IV. Handel Trade V. Vrije beroepen Medicine, law, religion, education VI. Overheidsdienst Public or government service VII. Overige beroepen Other Among group IV (Handel) Occupational Subgroup English Description Chinese Others In voedings- en negotmiddelen Foodstuffs In textiele stiffen Textiles In ceramiek Ceramics In hout, bamboe en voorwerpen daarvan Wood and bamboo products In vervoermiddelen Vehicles In kleeding en lederwaren Clothing Gemengde kleinhandel Miscellaneous small trading Groot- en tusschenhandel Wholesale and distribution Overige handel Other trade Credietwezen Banking and finance Source: Author s calculations from Departement van Economische Zaken (1935), Table 14. Pepinsky (Cornell) Governance in Java February 13, / 39

57 Rosenbaum Bounds Explore sensitivity to differential treatment assignment Dichotomize Chinese 1930 at median Match on province and urban/rural dummies (pretreatment covariates) and Arab 1930 Let Γ = probability of differential treatment assignment (Γ = 1 if unconfounded) Signed rank test statistic (ATE) for dichotomized Chinese 1930 is positive and significant at p <.05 for Γ 1.7 Pepinsky (Cornell) Governance in Java February 13, / 39

58 Extras: Economic Outcomes Results Table 6: Economic Outcomes Independent Variables Annual per capita expenditure Development expenditure Development expenditure per capita Non-oil & gas manufacturing /GRDP Agriculture/ GRDP Value Added Investment Number of Firms CHINESE PER CITIZENS (1930) (2.45) (3.71) (-2.07) (1.95) (-1.73) (4.63) (2.51) (3.05) OTHER ASIANS PER CITIZENS (1930) (0.93) (-1.00) (0.25) (1.02) (-1.96) (-0.49) (0.64) (-0.49) EUROPEANS PER CITIZENS (1930) (-1.15) (0.067) (-0.49) (-1.52) (0.20) (-2.18) (-1.54) (0.73) SEC. ENROL. RATE (2001) (5.58) ( ) (0.21) (2.70) (-4.67) (1.07) (2.05) (0.72) URBAN (6.13) (-3.18) (7.13) (-0.69) (-3.16) (-1.69) (-1.64) (-3.24) CONSTANT (6.88) (2.61) (2.90) (-0.34) (9.28) (-2.35) (-2.19) (-0.96) Province Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Observations Each model is an OLS regression with t-statistics in parentheses. Column heading contain dependent variables; see Table S5 in the Supplemental Appendix for variable descriptions, sources and units of measurement. Pepinsky (Cornell) Governance in Java February 13, / 39

59 Extras: Good Governance Results Table S7: Social Structure Results Independent Variables Flash floods Flash flood Asphalt deaths roads Road quality CHINESE PER 1000 CITIZENS (1930) (1.08) (1.14) (-0.33) (0.55) OTHER ASIANS PER 1000 CITIZENS (1930) (-0.78) (-0.76) (1.65) (-1.58) EUROPEANS PER 1000 CITIZENS (1930) (0.11) (0.78) (0.78) (-0.74) SEC. ENROL. RATE (2001) (-1.00) (-1.49) (2.89) (-3.18) URBAN (-1.66) (-1.03) (2.06) (-2.24) CONSTANT (0.81) (0.52) (7.38) (17.0) Province Fixed Effects Yes Yes Yes Yes Observations Independent Variables Mass violence Thieving Robbery Mistreatment CHINESE PER 1000 CITIZENS (1930) (2.40) (2.31) (2.94) (1.72) OTHER ASIANS PER 1000 CITIZENS (1930) (0.63) (0.99) (-0.33) (0.30) EUROPEANS PER 1000 CITIZENS (1930) (-1.40) (2.23) (-1.70) (-0.41) SEC. ENROL. RATE (2001) (0.89) (-1.19) (-0.014) (1.17) URBAN (-0.54) (-1.76) (3.81) (2.23) CONSTANT (1.23) (8.98) (0.90) (1.39) Province Fixed Effects Yes Yes Yes Yes Observations Each model is an OLS regression with t-statistics in parentheses. Column heading contain dependent variables. Pepinsky (Cornell) Governance in Java February 13, / 39

60 Settlement as an Instrument? Statistical results hold: 1. Correlations hold for stripped EGI 2. weak identification results are acceptable 3. overid tests strong Pepinsky (Cornell) Governance in Java February 13, / 39

61 Settlement as an Instrument? Statistical results hold: 1. Correlations hold for stripped EGI 2. weak identification results are acceptable 3. overid tests strong BUT: A valid instrumental variable if... Settlement Governance X Investment, etc. Pepinsky (Cornell) Governance in Java February 13, / 39

62 Settlement as an Instrument? Underlying Causal Model Settlement Political Economy Industrial Structure Governance Indicators Investment Etc. Pepinsky (Cornell) Governance in Java February 13, / 39

63 Settlement as an Instrument? Underlying Causal Model Settlement Political Economy Industrial Structure Governance Indicators Investment Etc. Settlement Reduced Form Estimates Political Economy Industrial Structure Governance Indicators Investment Etc. Pepinsky (Cornell) Governance in Java February 13, / 39