Juan Rebolledo DO NOT CIRCULATE Unfinished Business: The Political Economy of Subnational Democracy First (Very Rough) Attempt at a Prospectus Prepared for the Leitner Seminar on Political Economy April 8, 2009 Understanding the determinants of both political and economic development is one of the age old questions that should nonetheless remain at the forefront of our research agenda. Recent years have seen a resurgence of socioeconomic explanations to political development. In particular, the study of both the economic causes and consequences of democratization has become quite popular. This literature, however, has assumed that political development (seen as achieving a national democracy) will inevitably permeate to the whole territory. After democratization the subunits within the regime, which had not already done so, will follow suite in becoming more democratic and the economic effects of the new institution will begin to be felt throughout. This has not been the case. In countries as diverse as India, Brazil, Philippines, Mexico, and Argentina among others, subnational regimes with authoritarian characteristics successfully maintain control despite national democratization. Three questions of great relevance emerge: Why do some subnational units retain authoritarian characteristics while others successfully consolidate democracy? How are these subnational units able to resist pressures for further democratization? What are the socioeconomic impacts of retaining such a mélange of institutions?A research project exploring these issues in light of the recent advances in the democratization literature is due. This type of inquiry is not new, and it’s not exclusive to developing nations, V.O Key’s canonical text on Southern Politics is an exploration of these issues in the United States. However no general theory exists that works as framework to understand the dynamics of such subnational regimes. We need a better sense of how national democracy spreads (or does not spread) throughout the territory. It seems to me that this area of inquiry is relevant and important to theories of democratization, of democratic consolidation and of quality of democracy. It is also relevant to the study of center-periphery dilemmas, effects of institutions, informal institutions, economic development and territorial politics among others. It could also potentially have policy implications deriving from a better understanding of what facilitates the entrenchment of such authoritarian institutions in a democratic setting. At the moment there are two opposing theories under development in the discipline1. The first of which claims there is no reason to believe subnational democratization would be any different than national democratization and attempts to test the different democratization theories at the subnational level. The two main findings are that development does not account for variation in level of subnational democracy and proposes instead a rentier theory of subnational democratization in which states that get high amounts of federal funding are less likely to be democratic. The second theory starts off denying that the same forces would be at play subnationaly that in national democratization. In this theory subnational authoritarian regimes are able to stay in power by controlling the scope of the conflict which implies not getting national attention. The 1 Gibson (Book Manuscript Forthcoming), Garvasoni (Dissertation Forthcoming)opposition, on the other hand, will constantly try to make local conflicts of national interest. As long as the local autocrat can maintain his locality away from national attention he will be able to stay in power. I believe that both extreme paths are unproductive. Neither should we completely dismiss theories of democratization nor should we apply them directly in a setting that is clearly distinct. Though I do believe that a key to understanding subnational democratization is the interaction between the elites and the masses, simply applying national theories of democratization would fail to acknowledge a third actor, the democratic national government. More specifically, it is my belief that a rentier theory of subnational democratization is incorrect and that a focus on information flow clearly underestimates the role of socioeconomic factors. My dissertation would attempt to pick up where Boix (2003), Acemoglu and Robinson (2006), and Winthrobe (1998) left off and attempt to explain what the strategic interaction is between the different actors at the subnational level. I believe the key to understanding how democratic the subunits are is to study the balance of power between the governor and the national party leaders, the president, the local opposition, the local economic elites, and the local masses. As pointed out above, if we looked at the governor and the local players perhaps we would expect the same results as in theories of democratization, however the incorporation of a national actors will alter the dynamics.My initial intuitions lead me to a story in which the local economic elites seek to maintain their prerogatives of market alteration and exploitation. The elites therefore ally themselves with the governor of the state in her attempt to capture power since it is cheaper for the elites to negotiate with one actor than it would with the plurality of veto players in a working democracy (legislators, judges). The local opposition is constantly pressuring for democratization on two fronts: 1- demanding changes in the institutions to “level the palying field” (via local reforms or national intervention) 2- attempting to win the local elections despite the uneven playing field (which could theoretically lead to a local autocracy from the opposition). The local autocrat will try to manipulate the masses, local judges and local congressmen by (borrowing from Winthorbe) using combinations of repression2 and loyalty. The masses do not pose a threat in the same way that they do in Boix (2003) or Acemoglu and Robinson (2006) since they are not really