Bureaucratic Capacity and the Adaptation of Institutional Transplants

Abstract: Empirical research (Grajzl and Dimitrova-Grajzl 2009, Berkowitz et al. 2003) indicates that imported law lacks effectiveness unless it is successfully adapted to local legal norms. The need for institutional adaptation has been discussed from a theoretical point of view in institutional economics (Boettke et al. 2008, North 1994). Bureaucrats are believed to be central in adapting foreign institutions as intermediaries but their impact on institutional quality has never been fully explained. This paper investigates the extent to which bureaucratic capacity contributes to the success of institutional transplants. It exploits the fact that during decolonization a large number of former British colonies intensively imported European institutions. There is a certain degree of variation of institutional quality among these states today, but there is no robust theory that explains it. The authors use data of former British colonial officers which were collected at the Institute for Advanced Study in 2014. We offer a human capital theory of governance transplants by using the proportion of expatriates (former colonial officers) among civil servants at the time of independence as a proxy for bureaucratic quality and adaptation.