Berkeley-Haas hires “rising star” in development economics

Asst. Prof. Guo Xu
Asst. Prof. Guo Xu studies the impact of patronage in the administration of the British Empire.

A development economist who studies hiring practices through the lens of political structures is the latest addition to the Haas faculty.

Asst. Prof. Guo Xu will join the Berkeley-Haas Business & Public Policy Group. He will teach the Ethics and Responsible Business Leadership course to MBA students in the spring.

Xu earned his doctorate in economics earlier this year from the London School of Economics. While there, he won both the Class Teacher Award in 2017 and the Royal Economic Society Junior Fellowship in 2016. He also holds master’s degrees in both economics and development studies from LSE.  Prior to moving to London, Xu earned a BS in Economics at the Humboldt-Universität in Berlin.

Xu has served as a consultant to the Asian Development Bank, the World Bank, and the Bank of England.

A passion for development economics

Xu’s main research interest is development economics, and he says that understanding the organization of the public sector is key to understanding how an economy performs. “I’ve always wanted to understand why one country is rich and another is poor,” he said. Xu’s work explores how hiring and promotion rules in the public sector affect the business environment and economic performance.

For his studies, Xu leverages unique events in history. In his paper The Costs of Patronage: Evidence from the British Empire, he combed through historical personnel records and public finance data from the colonial administration to study “the inner workings of a bureaucracy that controlled close to a fifth of the earth’s land mass at its peak.” The data allowed him to study how promotion rules codified by the British to build their global empire shaped the development of modern states.

Prof. Ernesto Dal Bó, also of the Business & Public Policy Group, called the amount of data Xu examined “staggering,” and said that the results put him on the map in his field as a rising star. “He had to go and hand-collect from the archives massive amounts of data, reconstructing the empire colony by colony, year by year, finding out who the colonial minister was. He had to reconstruct the histories of all these patronage networks.”

But the careful archival work was only a first step, Dal Bó said. Using his knowledge of the history of the British Empire, Xu’s goal was to develop clever tests that would allow him to prove that the personnel institutions of the Empire played a causal role in individual careers as well as colonial outcomes. “The triple combo of data collection, historical knowledge, and empirical research design allow Guo’s work to push the social science frontier world-wide,” Dal Bó said.

Timely themes

His findings showed that patronage networks may have benefited an elite circle of governors who secured their promotions through their social connection to the colonial minister–but this hurt economic performance as these governors performed adversely; colonies saw their tax collection and investments drop under connected governors.

Dal Bó said the paper’s themes are timely, considering the debate over patronage versus meritocracy in government hiring that persists today. “These issues were important before and now one also perceives a concern. This is now household conversation.”

Xu said he was drawn to Haas for its culture and its strong public policy research, including the groundbreaking work of Dal Bó on political economy and Assoc. Prof. Noam Yuchtman’s expertise in political behavior and the labor market.

He’s recently begun collaborating with Asst. Prof. Raúl Sánchez de la Sierra on a project about talent retention in developing countries.

Xu said he’s looking forward to teaching. “It’s a good way to stay up to date and to see yourself developing over time,” he said. “You have to think things through in order to teach them, through the whole experience of preparing and interacting with students.”