Published online by Cambridge University Press: 18 April 2018
International wars and interstate rivalry have been at the center of our understanding of the origin and expansion of state capacity. This article describes an alternative path to the development of state capacity rooted in domestic political conflict. Under conditions of intra-elite conflict, political rulers seize upon the temporary weakness of their rivals, expropriate their assets, and consolidate authority. Because this political consolidation increases rulers’ chances of surviving an economic elite’s challenge, it enhances their incentives to develop state capacity. These ideas are evaluated in post-revolutionary Mexico, where commodity price shocks induced by the Great Depression affected the local economic elite differentially. Negative shocks lead to increased asset expropriation and substantially higher investments in state capacity, which persist to the present.
Fieldwork for this project was supported by the Stanford Graduate Fellowship. I am grateful to Ran Abramitzky, Avi Acharya, John Ahlquist, Lisa Blaydes, Darin Christensen, Alberto Díaz-Cayeros, Simon Ejdemyr, Nick Eubank, Adriane Fresh, Nikhar Gaikwad, Steve Haber, Stephan Haggard, Jens Hainmueller, Saumitra Jha, Dorothy Kronick, David Laitin, Gordon McCord, Beatriz Magaloni, Agustina Paglayan, Ramya Parthasarathy, Zaira Razú, Ken Scheve, Jeffrey Timmons, and seminar participants at MPSA 2015, Berkeley, CIDE, APSA 2015, LACEA 2015, Stanford, UCSD, ITAM, ITESM Campus Monterrey, and IPEG for comments and suggestions. I thank the APSR editors and four anonymous referees for their careful and constructive reviews.