Federalism

Question 1

Bednar definition

Answer 1

Federalism must satisfy a) geopolitical division, b) independence and c) direct governance

Question 2

Riker definition

Answer 2

Activities of government are divided between regional governments and a central government in such a way that each kind of government has some activities on which it makes final decisions

Question 3

Bermeo quote

Answer 3

‘federalism is not a panacea’

Question 4

Beramendi (types)

Answer 4

1. Federalism constitutes a complex reality in constant flux; there may not be one side which makes final decisions
2. Eg. Germany’s ‘fiscal federalism’, the US’s dual/ cooperative/ coercive federalism
3. Coercive federalism in the US - NCLB 2002 - major Bush administration domestic policy legislation, made education funding to states conditional on them adopting extensive student testing regimes and manage schools to their test results

Question 5

de Figueiredo and Weingast (structure)

Answer 5

Two dilemmas by federal states: 1. what prevents the national government from destroying federalism by overawing its constituent units? 2. What prevents the constituent units from undermining federalism by free-riding and failing to cooperate?

1. To overcome shirking - center must have sufficient monitoring resources and penalizing capacity to punish shirkers
2. To police centre overwhelming the states - states must coordinate on punishment strategies which limit the centre’s ability to extract resources from the states, increase the provision of public goods and result in higher public welfare
3. Exit costs shift rents to centre and low exit cost increase bargaining power
4. Benefits of federalism must be large enough so centre will not expropriate all contributions and states are better off
5. Bottom-up and top-down federalism bias institutions which capture rents for themselves

Question 6

Hooghe and Marks

Answer 6

Much more fluid forms of multi-level governance than traditional federalism is increasingly common: Type I and Type II decentralised states.
Type I is mutually exclusive at each territorial level, and the units at each level are perfectly nested within those at the next higher level. Each jurisdiction caters to an encompassing group or territorial community.
Type II splices public good provision into a large number of functionally discrete jurisdictions, but such jurisdictions do not conform to an overarching blueprint, with each designed to address a limited set of related problems. This is task-driven, and has low barriers to entry and exit to create more competition

Question 7

Riker

Answer 7

1. ‘Federal bargain’ - political elites in the centre offer it to expand their territorial control, to meet an external threat or prepare for aggression. Politicians in the sub-units give up some independence for the sake of union because of some military-diplomatic threat or opportunity.
2. Federalism is ultimately derived from technological advances that enable rule over a wide area
3. The “establishment of a federal government must be a rational bargain among politicians”
4. Federal states unstable - too weak a national government will exhibit free riding and insulated ‘dukedom’ economies, or even disintegrate. If too strong - federation typically fails because the national government compromises state independence

Stepan - Ricker’s predictions for the centrality of a ‘military or diplomatic threat’ are not empirically true

Question 8

Stepan (formation of federalism)

Answer 8

1) coming-together hypothesis - previously sovereign polities agree to give up part of their sovereignty in order to pool their resources to increase their collective security and to achieve other goals eg. the US
2) holding-together hypothesis - “political systems with strong unitary features” - eg India, 1990 Belgium (to appease minority ethnic groups), Spain - decide the best way to hold their countries together in a democracy would be to devolve power constitutionally and turn their threatened polities into federations eg. Riker - common currency and free trade;
(not his but a third: putting-together - a non-democratic centralising power creates a multinational state)

Question 9

Ziblatt (why adopt federalism?)

Answer 9

1. Ideational theories - due to greater ideological commitment to decentralist ideas in society
2. Cultural-historical theories - adopted more in societies with culturally or ethnically fragmented populations.
3. “Social contract” theories - federalism emerges as a bargain between a centre and a periphery where the centre is not powerful enough to dominate the periphery and the periphery is not powerful enough to secede from the centre.
4. “Infrastructural power” theories - federalism emerges when subunits of a potential federation already have highly developed infrastructures (e.g. they are already constitutional, parliamentary, and administratively modernized states)

Question 10

Ziblatt (main idea)

Answer 10

Distinguishes between federal and unitary state. What matters is whether the subunits have 1) parliamentary institutions embedded in society and 2) well-developed administrative structures. In high infrastructural subunits, they become credible negotiating partners and have infrastructural capacity to deliver public goods & capacity to hold onto existing structures. Whereas if subunits lack institutions, negotiations break down and the centre can sweep away subunits lacking governing capacity

Question 11

Boone

Answer 11

Decentralisation as a political strategy in West Africa
1. Has strengthened local power brokers and state agents instead in many cases
2. Freer markets can lead to cutbacks instead of new opportunities in export crop production
3. Decentralisation is something regimes use to reinforce their own advantage, and they are unlikely to devolve real power and resources to rural leaders they do not trust or control
4. Best prospects in central Senegal, where a relatively stable rural elite (with legitimate authority on the local level) is already encompassed in the governing structures of the state

Question 12

Tiebout

Answer 12

Spatial mobility provides the local public goods counterpart to the private market’s shopping trip. Citizens can select a local government by moving and voting with their feet. If there is an optimal community size for a package of public goods, those in oversized cities will leave for undersized cities

Question 13

Beramendi (effects)

Answer 13

Changing effects of federalism: in the 1980s, federalism created better democracy, bureaucracies and markets. Now, the effects are complex, multidimensional

Question 14

Wibbels

Answer 14

Federal collective action problem:
1. across 46 developing countries, federalism has a consistent and negative impact on long-term macroeconomic performance, volatility, and the frequency of economic crisis.
2. For a subnational politician, economic reform has broad benefits and spillover to other subnational units, and narrowly focused costs (within the subnational unit). Avoiding cost of fiscal adjustment
3. Because national governments cannot take overall responsibility for macroeconomic decisions, and subnational governments face tempting incentives to default at the expense of national governments which are the lender of last resort.

Question 15

Rodden and Wibbels

Answer 15

Among 14 federal systems, fiscal surplus increased when decentralisation increased - what matters is the structure of the federal system. This includes:
1) levels of revenue transfer and dependence on the central state (less dependence better)
2) especially when fiscal dependence on central state is combined with lots of decentralisation
3) party structure and partisan continuity is better

Question 16

Rodden

Answer 16

1. Regional transfer dependency is associated with a higher demand for bailouts, because fiscally dependent regions may incur large debts and transfer the costs of fiscally irresponsible policies to other units in the federation.
2. Fiscally autonomous subnational units reduce aggregate deficits and inflation rates and facilitate sustained economic growth.
3. As greater financial self‐reliance affects the extent to which subnational governments internalize the benefits of their economic progress, subnational incumbents have a strong incentive to create a market‐preserving environment.

Question 17

O’Dwyer and Ziblatt

Answer 17

Impact of decentralisation on government effectiveness and efficiency (spending on education and social security per public employee)
1. socioeconomic context is important - political decentralisation increases efficiency in high GDP countries but decreases efficiency in low GDP countries.
2. What knd of decentralisation? Political decentralisation is related to efficiency, and fiscal decentralisation is related to effectiveness

Question 18

Can et al

Answer 18

higher competition and better performance and economic growth

Question 19

Tsebelis

Answer 19

Federalism greatly increases the number of veto players (provinces) capable of obstructing economic adjustment policies. Leads to the lack of incentives to reform because they do not want to bear the cost

Question 20

Olson

Answer 20

Free rider problem, as economic adjustment is a public good. Federalism tends towards macroeconomic fragility, volatility and crisis. Eg. Mexico and Argentina have strong macroeconomic indicators but this masks weak provincial uptake

Question 21

Oates and Schwab

Answer 21

Corroborates Olson, noting that local governments can exploit spillovers and export taxes/pollution to neighbours

Question 22

Cai and Treisman

Answer 22

Federalism corrodes states, as regional governments can compete for capital by shifting firms from central tax collectors, bankruptcy courts or regulators, which erodes the centre’s ability to channel competition in welfare-enhancing directions. Seen in Russia, China and the US. Hence, capital mobility facilitates the ability of poor units’ incumbents to engage in ineffective public policy since capital is likely to flow from poor to rich regions.

BUT this could be beneficial, as the need to attract capital could render local officials more honest and efficient, and prompt them to invest more in infrastructure

Question 23

Hooghe and Marks (argument)

Answer 23

Centralised government cannot accomodate diversity or varying scale efficiencies:
1. Ecological conditions - controlling smog in low-lying flat areas vs in areas surrounded by hills
2. Citizen preferences can vary sharply
3. Economies of scale apply more to capital-intensive public goods than labour-intensive services - hence economies of scale in military defense and physical infrastructure is far greater than in education
4. Externalities for eg. climate change have to be accommodated for by custom-designing jurisdictions

Question 24

de Figueiredo and Weingast (outcomes)

Answer 24

In America, the failure to provide the national government with sufficient authority to finance common defense, police internal trade and control currency led to common pool problems -
1) states refused to contribute to national finances,
2) many erected trade barriers, and
3) currencies were ‘oversupplied’ by some states
State shirking and common pool problems from subnational governments arise when you lack a strong centre

Question 25

Braun et al

Answer 25

1. Federalism influences fiscal policy making depending on the territorial division of powers.
2. Canada (power-separation system) - the federal government has encompassing competencies to use fiscal policy instruments unilaterally and without restraint. BUT faces a lack of concerted action with the provinces which reduces its scope of action in fiscal policymaking
3. Germany (power-sharing system) - concerted action facilitates macroeconomic stabilisation strategies. BUT compulsory negotiation system distorts the use of fiscal policy instruments by distributive bargaining.

Question 26

Amoretti

Answer 26

1. Territorial cleavages - a ‘self-conscious minority concentrated in a specific area of a state’s territory’
2. Federalism can accommodate territorial cleavages through shared rule, by minimising violence, promoting regionalism instead of separatism, and protecting minority rights

Question 27

Bermeo

Answer 27

1. Federalism as ‘peace preserving’ :
   1) provide more layers of government and more settings for peaceful bargaining,
   2) give some regional elites a greater stake in existing political institutions.
2. In wealthy states, federalism led to less armed rebellion, political and economic discrimination and cultural grievances. The comparative is often separatism as the result of coercion; and if there is externally imposed federalism, it doesn’t work
3. Federations that remain as a legacy of authoritarian regimes are less successful than federations emerging from a contractual agreement

Question 28

Baake and Wibbels

Answer 28

There is no one optimum federalism design; the institutions are contextual and depend on the ethnic, economic and policy setting. There is more conflict if there is:
1. interregional inequality and ethnic concentration
2. fiscal decentralisation and interregional inequality, or
3. copartisanship between levels and ethnic exclusion.

Question 29

Hale

Answer 29

Ethnofederalism - component territorial governance units are intentionally associated with specific ethnic categories. It generally preserves ethnically divided states by:
1. satisfying demands for autonomy on key issues, 2. localising potential conflicts, 3. promoting unifying identities, and 4. reducing opportunities for the central government to exploit minority regions

BUT dual power: ethnofederal states are vulnerable to collapse if the core ethnic region (20% more of the whole country’s population compared to the second largest region) is particularly dominant. Dual power 1. causes state breakdown and revolution, 2. reduces capacity of central governments to credibly commit to security of ethnic minority regions, and 3. facilitates the collective imagining of a core-group nation-state separate from the union state

Evidence: 13 ethnofederal states with no core region = no collapse; 14 with core region = 7 collapse with 3 civil wars

Question 30

Linz

Answer 30

Pre-existence of federal structure before democratisation fosters conflict, violence, and regime failure. If there were no pre-existing structures, federalism can display its capacity to accommodate contending national identities

Question 31

Stepan (federal design)

Answer 31

Internal articulation of power within federations is important. The higher the institutional leverage given to already mobilized ethnic minorities, the lower the likelihood that federations are able to prevent territorial disintegration

Question 32

Boix

Answer 32

Federalism facilitates the survival of democracies with high levels of inter‐regional income inequality, because it decentralises control over redistribution

Question 33

Weingast

Answer 33

A central authority can use a ‘divide and conquer’ strategy to transgress its authority without reprisal
BUT Riker - political parties can create federal stability: the need to cooperate to win elections drives national and subnational officials to respect one another’s interests

Question 34

Wibbels (other factors)

Answer 34

1. Regional governance structrues are the consequence of economic features at the time of constitution-writing and reflect the underlying bargain
2. Especially a) factor endowments (the base of economic activity, eg. population and geography) and b) regional inequality (potential redistribution between regions).
3. Eg. similar factor endowments and equal regional distribution of wealth = centralised, with little redistribution, in Nordic states.
4. Eg. dissimilar factor endowments with equal regional distribution of wealth = decentralised with little redistribution eg. US. Decentralised with redistribution = Argentina and Canada.
5. Argentina - its 1853 constitution was rife with conflict reflecting diverse regional interests with a weak central state. Intense demands for regional redistribution and a sharp disjuncture between the constraining political logic in the constitution and the economic dynamism of its hegemonic province (Buenos Aires) → led to instability and constitutional failure