Market-preserving Federalism Research Articles

Institutional Rules, Social Capacity, and the Stuff of Politics: Experiments in Collaborative Governance in France and Italy

When are decentralized public institutions most likely to succeed in promoting effective public good provision? Two influential literatures in political science, those on “empowered participatory governance” and on “market-preserving federalism,” both emphasize that getting the rules right is the decisive factor in determining the success of these devolved institutions. An emphasis on institutional rules obscures the fact that the predatory politicians and adversarial organizations that the two literatures design rules to contain are also two factors that are most likely to influence the success or failure of these institutions. Through an examination of recent French and Italian experiments in decentralized collaborative governance, this article argues that the social capacities of secondary associations and the ties between local and central politicians are in fact the principal determinants of how well decentralized institutions deliver public goods.

Bailouts, Budget Constraints, and Leviathans

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 longterm 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.

The Transition to Capitalism in China and Russia

AbstractAt the end of the 1970s the per capita income ratio between the Soviet Union and China was 16 to 1. By now, the gap between Russia and China is closing rapidly. Although the collapse and dissolution of the Soviet Union contributed to this levelling of per capita incomes, domestic factors and improvements in China look more important: decollectivization of Chinese agriculture, the establishment of township village enterprises in China, economic openness and market-preserving federalism in China. In all these respects, even post-Soviet Russia continues to lag. Admittedly, Russia was faster than China in privatizing state owned enterprises but the preferential treatment of insiders and the weakness of the rule of law or functional substitutes for it neutralized this potential Russian advantage.

Politik ohne Wettbewerbshindernisse

Abstract Whereas Eichenberger advocates better policies by deregulation of politics, politicians and political scientists in Western Europe are quite satisfied with Western democracies and their performance. This satisfaction is based on neglecting the insights from ‘Public Choice’ theorizing as well as on negating the coming pension crisis in ageing societies. Including Eichenberger’s ideas there are now five schools of thought about how to improve Western democracies: more direct democracy, strengthening market-preserving federalism, less law and fewer lawyers, exploiting international rivalries for limiting government and, now, dismantling the protection from foreign competition which elected representatives enjoy almost everywhere in the West.

An Essay on Fiscal Federalism

This paper is a selective survey of fiscal federalism. It begins with a brief review and some reflections on the traditional theory of fiscal federalism: the assignment of functions to levels of government, the welfare gains from fiscal decentralization, and the use of fiscal instruments. It then explores a series of important topics that are the subject of current research: laboratory federalism, interjurisdictional competition and environmental federalism, the political economy of fiscal federalism, market-preserving federalism, and fiscal decentralization in the developing and transitional economies.

The Logic of Market-Preserving Federalism

The Logic of Market-Preserving Federalism

Prospects of Institutional and Policy Reform in India: Toward a Model of the Developmental State?

India’s recently launched economic reforms will only be sustainable if they are accompanied by political reforms, which create the foundations of economic development. Establishing a Weberian-type bureaucracy adequately embedded in society will be useful, but not sufficient to enhance the incentive compatibility of public policies and economic performance. Due to the heterogeneity of the Indian economy and society, this institutional arrangement should be complemented by the concept of Participatory Market-Preserving Federalism, which combines the notion of embedded autonomy with the concept of Market-Preserving Federalism and the principle of subsidiarity. This induces a self-enforcing governance structure that reduces collective action problems, directly involves social groups and subnational governments into political decision making processes, and creates the political foundations of economic growth.

China's transition to markets: market-preserving federalism, chinese style

This paper studies the relationship between decentralization and the success of reform in China. We argue that a particular form of decentralization—called market-preserving federalism Chinese style—provides the critical foundations for market success. China's form of decentralization has served the critical purpose of creating markets at a time when political resistance to economic reform remained strong and when the durability of the reforms was important. Nonetheless, federalism, Chinese style, lacks some national public goods, and the new system needs to be institutionalized. We also highlight some parallels between the United States under the Articles of Confederation (1781-1787) and those of modern China.

The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development

Journal Article The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development Get access Barry R. Weingast Barry R. Weingast Standford University Search for other works by this author on: Oxford Academic Google Scholar The Journal of Law, Economics, and Organization, Volume 11, Issue 1, April 1995, Pages 1–31, https://doi.org/10.1093/oxfordjournals.jleo.a036861 Published: 01 April 1995