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Political Competition and State Capacity: Evidence from a Land Allocation Program in Mexico

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  • Fergusson, Leopoldo
  • Larreguy, Horacio
  • Riano, Juan Felipe

Abstract

We develop a model of the politics of state capacity building undertaken by incum-bent 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 Mex-ican 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.

Suggested Citation

  • Fergusson, Leopoldo & Larreguy, Horacio & Riano, Juan Felipe, 2022. "Political Competition and State Capacity: Evidence from a Land Allocation Program in Mexico," TSE Working Papers 22-1293, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:126517
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    Cited by:

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    2. Esteban Muñoz-Sobrado & Amedeo Piolatto & Antoine Zerbini & Federica Braccioli, 2024. "The Taxing Challenges of the State: Unveiling the Role of Fiscal & Administrative Capacity in Development," Working Papers 1432, Barcelona School of Economics.
    3. Francesco Amodio & Giorgio Chiovelli & Sebastian Hohmann, 2024. "The Employment Effects of Ethnic Politics," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 456-491, April.
    4. Eslava Saenz, Francisco & Valencia Caicedo, Felipe, 2023. "Origins of Latin American Inequality," CEPR Discussion Papers 18263, C.E.P.R. Discussion Papers.
    5. Leopoldo Fergusson, 2019. "Who wants violence? The political economy of conflict and state building in Colombia," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 38(78), pages 671-700, November.
    6. Ana L. De La O, 2021. "How clientelism undermines state capacity: Evidence from Mexican municipalities," WIDER Working Paper Series wp-2021-169, World Institute for Development Economic Research (UNU-WIDER).
    7. Elizalde, Aldo, 2020. "On the economic effects of Indigenous institutions: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 147(C).
    8. Canen, Nathan & Ch, Rafael & Wantchekon, Leonard, 2023. "Political uncertainty and the forms of state capture," Journal of Development Economics, Elsevier, vol. 160(C).
    9. Derek P. Mitchell, 2024. "Indigenous autonomy and decentralization in Colombia's quest for peace," Global Policy, London School of Economics and Political Science, vol. 15(S3), pages 14-25, June.
    10. Artem Kochnev, 2021. "Marching to Good Laws: The Impact of War, Politics, and International Credit on Reforms in Ukraine," wiiw Working Papers 192, The Vienna Institute for International Economic Studies, wiiw.
    11. De La O, Ana L., 2024. "How clientelism undermines state capacity: Evidence from Mexican municipalities," World Development, Elsevier, vol. 173(C).
    12. Kustov, Alexander & Pardelli, Giuliana, 2024. "Beyond Diversity: The Role of State Capacity in Fostering Social Cohesion in Brazil," World Development, Elsevier, vol. 180(C).

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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