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The work linking natural resource wealth to authoritarianism and underdevelopment suffers from several shortcomings. In this article, the authors outline those shortcomings and address them in a new empirical setting. Using a new data set for the U.S. states spanning 73 years and case studies of Texas and Louisiana, the authors are able to more carefully examine both the diachronic nature and comparative legs of the resource curse hypothesis than previous research has. They provide evidence that natural resource dependence contributes to slower economic growth, poorer developmental performance, and less competitive politics. Using this empirical setting, they also begin parsing the mechanisms that might explain the negative association between resource wealth and political and economic development. They draw implications from intranational findings for resource abundant countries across the world and suggest directions for future cross-national and cross-state work. Keywords: resource curse; trade; development; mineral wealth; political competition

Recent research on federations, particularly in the developing world, emphasizes the importance of hard budget constraints and a strong central government to attenuate intergovernmental economic conflicts. Such research fails on two counts. First, it does not explain how hard budget constraints emerge or become self-enforcing. Second, it does not take into account the insight of the market-preserving federalism literature that central governments strong enough to impose restraint on regions are likely too powerful to be checked in a manner consistent with the long-term health of markets. Unfortunately, the market-preserving federalism literature itself provides little insight into how to move from a market-distorting to a market-preserving equilibrium. This article answers these theoretical shortcomings with reference to the evolution of political competition at the regional level and the representation of those regions at the national level. More specifically, whereas regional competition determines the subnational demand for soft budget constraints, the coalition of those regions at the national level determines the likelihood of their provision. Empirically, the research relies on a case study of the state debt crisis of the 1840s when the United States made a definitive movement toward market-preserving federalism. Keywords: market-preserving federalism; comparative federalism; hard budget constraints

This article examines the role of federal governments' economic and political arrangements in shaping market reforms in developing countries. The author develops a macroeconomic model of reform to examine the importance of subnational economic policies and their capacities to conform to market pressures; results show that policy divergence shrinks between different levels of government when provincial governments have more fiscal power and there are high degrees of party centralization at all levels of government.

Using economic data for the period between 1979 and 1995 for forty-six large federal and unitary developing nations, I analyze the impact of political federalism in the developing world on a number of measures of national economic adjustment, volatility, and crisis. The findings suggest that federalism in the ten nations where it operates has, as theoretically predicted, a negative effect on macroeconomic performance and reform. I argue that the macroeconomic and fiscal imbalances experienced by these federal nations are, in part, structurally determined by their devolved political and fiscal institutions that crate incentives for subnational governments to avoid the political costs of fiscal adjustment.

Existing research has failed to address the impact of subnational polities on economic adjustment. This article attempts to fill this gap by outlining theoretical reasons for anticipating policy divergences across levels of government and by offering three hypotheses to account for variation at the subnational level. The authors explore these ideas on the basis of the Argentine experience. The study traces the impact of subnational policy on Argentine economic adjustment and tests hypotheses about subnational policy variation on the basis of provincial fiscal data. The authors' findings underline the importance of subnational policy choice for national performance and suggest a revised understanding of the role of political competition in the economic adjustment process. The authors find considerable evidence that interactions between party competition and the structure of the public sector shape provincial fiscal performance and thereby condition the capacity for economic adjustment at the national level.

Three different theoretical explanations are tested for the exceptionally high level of electoral volatility found in contemporary Latin America: economic voting, institutional characteristics of political regimes and party systems, and [...]