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

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.

On the economic effects of Indigenous institutions: Evidence from Mexico

“…One possible explanation of this apparent divergence is the deep economic crisis starting in the 1950s which caused discontent across rural Mexico. As documented by Fergusson et al (2018), because this economic crisis significantly undermined the ruling political party's hegemony, the government started to accelerate its land distribution policy in order to reduce social unrest and political competition. Indeed, Indigenous communities also took over the demands throughout the 1960s, leading to the establishment of political organisations whereby land restoration issues were addressed (Altamirano-Jimenez, 2013).…”

“…The figure also shows two prominent peaks, one during the 1930s and another one in the 1960s. At first sight, these peaks appear to be linked to the political and economic contexts at that time, such as the great acceleration of redistribution of land during the Cardenas presidency (1934)(1935)(1936)(1937)(1938)(1939)(1940) and the massive social discontent that emerged in the 1960s, triggered in part by a deep economic crisis in the 1950s (Fergusson et al, 2018).…”

“…3 Albertus et al (2016) found that land redistribution appears to be greater during periods of significant political threats to the incumbent party's hegemony, resulting in lower development outcomes. Fergusson et al (2018) empirically tested a model on the comparative advantage of clientelism using land reform in Mexico. They argue that clientelist political parties opt for a weaker bureaucratic state capacity in areas where their political position is placed at risk by the opposition.…”

“… See: Dell, 2012; De Janvry et al, 2015; Albertus et al, 2016;Fergusson et al, 2018; Lillo Bustos, 2018;and Montero, 2018 …”

Complements or Substitutes? How Institutional Arrangements Bind Traditional Authorities and the State in Africa

“…I approximate state capacity by the physical distance to state institutions (Fergusson, Larreguy, and Riaño 2022). The ability of state agents to govern and implement policies in a given location decreases the farther away they are (Brinkerhoff, Wetterberg, and Wibbels 2018;Stasavage 2010).…”