Working Paper: NBER ID: w22250
Authors: Daron Acemoglu; James A. Robinson; Ragnar Torvik
Abstract: We provide a potential explanation for the absence of, and unwillingness to create, centralized power in the hands of a national state based on the political agenda effect. State centralization induces citizens of different backgrounds, interests, regions or ethnicities to coordinate their demands in the direction of more general-interest public goods, and away from parochial transfers. This political agenda effect raises the effectiveness of citizen demands and induces them to increase their investments in conflict capacity. In the absence of state centralization, citizens do not necessarily band together because of another force, the escalation effect, which refers to the fact that elites from different regions will join forces in response to the citizens doing so. Such escalation might hurt the citizen groups that have already solved their collective action problem (though it will benefit others). Anticipating the interplay of the political agenda and escalation effects, under some parameter configurations, political elites strategically opt for a non-centralized state. We show how the model generates non-monotonic comparative statics in response to the increase in the value or effectiveness of public goods (so that centralized states and public good provision are absent precisely when they are more beneficial for society). We also suggest how the formation of a social democratic party may sometimes induce state centralization (by removing the commitment value of a non-centralized state), and how elites may sometimes prefer partial state centralization.
Keywords: state centralization; political agenda effect; public goods; elite strategies; social democratic parties
JEL Codes: D70; H11; P48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| state centralization (H77) | citizen organization (L39) |
| citizen organization (L39) | elite decisions regarding state structure (H11) |
| state centralization (H77) | demands for general-interest public goods (H49) |
| demands for general-interest public goods (H49) | investments in conflict capacity (H56) |
| absence of state centralization (H77) | citizens do not band together (J58) |
| greater public goods value (H49) | decrease likelihood of state centralization (H77) |
| formation of a social democratic party (B14) | shift equilibrium towards state centralization (H77) |
| shift equilibrium towards state centralization (H77) | enhance citizens' utility (H49) |
| enhance citizens' utility (H49) | better public goods provision (H49) |