Geoscience Reference
In-Depth Information
decentralization would, in such a scenario, enhance efficiency by allowing for
different strategies of redistribution rather than by preventing redistribution
itself. Put differently, under specific circumstances, decentralization may lock
in a more egalitarian structure where regions differ in dimensions other than
their average income levels. The implication that emerges from this study is
clear: several long term scenarios are feasible. Therefore it is not possible
to make normative claims, let alone policy prescriptions, about institutional
changes a priori, that is without investigating first the geography of inequality,
the patterns of interregional mobility, and the system of political representation
at work in the political unions in question.
Moreover, the interplay between these factors offers important insights on
the problem of institutional stability in federal polities. Economists and polit-
ical scientists alike have devoted significant intellectual efforts to ultimately
ascertain whether there exists an institutional design such that the federal con-
tract becomes “self-enforcing” (De Figueirido and Weingast
2005
). Indeed, the
quest for the “robust federation” has rendered major insights on the working
of federations, not least the idea that the stability of federal institutions requires
a set of complementary institutions (Bednar
2005
,
2008
).
Central to this approach is the problem of opportunistic behavior in the
context of federations (including migration of authority for the
wrong
reasons).
Opportunism, Bednar argues, can only be contained, not eliminated, through
a set of complementary institutions designed to maximize compliance and
minimize opportunism. Among these institutions, particular attention is paid
to constitutional safeguards, the party system, and the judiciary.
4
Each of these
institutions covers different types of opportunism, thereby reinforcing each
other's effectiveness. On their own, they are ineffective as guarantors of federal
stability. Yet in conjunction, when properly designed, foster the stability of the
federal contract. There is a great deal of insight in this reasoning as well as
a fair amount of hope about the potential gains from adequate institutional
engineering.
This study raises fundamental questions about the scope of these efforts.
To the extent that the “optimality” of any given design is conditional on the
economic geography under which it was adopted, any significant change in
the latter, whether exogenous or endogenous, creates a new set of conditions
that may render the status quo suboptimal but, more importantly, will help
to de-stabilize it politically (Hug
2005
). In other words, fiscal structures and
federal contracts, potentially self-enforcing under a particular set of economic
conditions, may unravel into a cycle of contention as a result of changes in
economic geography and/or political representation. These changes, as triggers
of new party strategies towards institutional reform, render any existing equi-
librium between the center and the regions fundamentally unstable, even if not
by design.
4
See also Bednar, Eskridge, and Ferejohn (
2001
).
