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

68 Pages Posted: 28 May 2020 Last revised: 29 May 2020

See all articles by Leopoldo Fergusson

Leopoldo Fergusson

Universidad de los Andes, Colombia - Department of Economics

Horacio Larreguy Arbesu

Harvard University

Juan Riaño

University of British Columbia (UBC)

Date Written: May 22, 2020


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 teórico sobre los incentivos políticos para la construcción de capacidades estatales por parte de gobernantes cuya ventaja comparativa es el clientelismo y no la provisión de bienes públicos. El modelo predice que, cuando enfrentan competencia de opositores, los gobernantes clientelistas tienen el incentivo a bloquear las inversiones en capacidad estatal. Presentamos evidencia empírica que apoya estas implicaciones estudiando decisiones del Partido Revolucionario Institucional (PRI) que afectaron la capacidad estatal a través de los municipios mexicanos y a lo largo del tiempo. Nuestras estrategias de diferencias en diferencias y variables instrumentales aprovechan un choque nacional que amenazó la hegemonía del gobierno mexicano al comienzo de la década de 1960. La intensidad de este choque en distintos municipios estuvo en parte explicada por la sequías severas que ocurrieron en los años 50.

Keywords: state capacity, political competition, land allocation

JEL Classification: D72, D73, Q15

Suggested Citation

Fergusson, Leopoldo and Larreguy Arbesu, Horacio and Riaño, Juan, Political Competition and State Capacity Evidence from a Land Allocation Program in Mexico (May 22, 2020). Documento CEDE No. 16, Available at SSRN: https://ssrn.com/abstract=3613175 or http://dx.doi.org/10.2139/ssrn.3613175

Leopoldo Fergusson (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976

HOME PAGE: http://www.googlesyndicatedsearch.com/u/uniandes?q=Leopoldo+Fergusson

Horacio Larreguy Arbesu

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Juan Riaño

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4

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