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How foreign lending weakens emerging nationsIn the nineteenth century, many developing countries turned to the credit houses of Europe for sovereign loans to balance their books and weather major fiscal shocks such as war. This reliance on external public finance offered emerging nations endless opportunities to overcome barriers to growth, but it also enabled rulers to bypass critical stages in institution building and political development. Pawned States reveals how easy access to foreign lending at early stages of state building has led to chronic fiscal instability and weakened state capacity in the developing world.Drawing on a wealth of original data to document the rise of cheap overseas credit between 1816 and 1913, Didac Queralt shows how countries in the global periphery obtained these loans by agreeing to "extreme conditionality," which empowered international investors to take control of local revenue sources in cases of default, and how foreclosure eroded a country's tax base and caused lasting fiscal disequilibrium. Queralt goes on to combine quantitative analysis of tax performance between 1816 and 2005 with qualitative historical analysis in Latin America, Asia, Africa, and the Middle East, illustrating how overreliance on external capital by local leaders distorts their incentives to expand tax capacity, articulate power sharing institutions, and strengthen bureaucratic apparatus.Panoramic in scope, Pawned States sheds needed light on how early and easy access to external finance pushes developing nations into trajectories characterized by fragile fiscal institutions and autocratic politics

AbstractIn this article I revisit the relationship between war and state making in modern times by focusing on two prominent types of war finance: taxes and foreign loans. Financing war with tax money enhances the capacity to assess wealth and monitor compliance, namely fiscal capacity. Tax-financed war facilitates the adoption of power-sharing institutions, which transform taxation into a non-zero-sum game, carrying on the effect of war in the long run. Financing war with external capital does not contribute to long-term fiscal capacity if borrowers interrupt debt service and, as part of the default settlement, war debt is condoned or exchanged for nontax revenue. The empirical evidence draws from war around the world as early as 1816. Results suggest that globalization of capital markets in the nineteenth century undermined the association between war, state making, and political reform.

This paper assesses whether economic voting plays any role in a parliamentary, decentralized polity. Decentralization is argued to blur lines of responsibility and confuse voters about whom to blame for poor economic performance at the national and regional levels. National and Regional Economic Voting (NEV and REV, respectively) are tested in Catalonia (Spain). The initial empirical test suggests that only NEV takes place in this region. Four hypotheses are considered to explain REV's absence: blame-shifting, blinding nationalism, coalition government, and misinformation regarding Policy Responsibility Distribution across tiers of government. Using reasonable counterfactuals and Bayesian techniques, the first three hypotheses are dismissed, whereas the last is confirmed. The results emphasize the informational requirements behind the economic voting theory. [Copyright Elsevier Ltd.]

This article examines the adoption of income taxes in Western economies since the 19th century. We identify two empirical regularities that challenge predictions of existing models of taxation and redistribution: While countries with low levels of electoral enfranchisement and high levels of landholding inequality adopt the income tax first, countries with more extensive electoral rules lag behind in adopting these new forms of taxation. We propose an explanation of income tax adoption that accounts for these empirical regularities. We discuss the most important economic consideration of politicians linked to owners of different factors, namely, the shift of the tax burden between sectors, and examine how preexisting electoral rules affect these political calculations. The article provides both a cross-national test of this argument and a microhistorical test that examines the economic and political determinants of support for the adoption of the income tax in 1842 in Britain.

AbstractAnticipated trade, insurance, and fiscal shocks from independence structure preferences for secession independently from nonmaterial considerations. To test this claim, we draw from an original survey conducted in Catalonia before the 2017 regional election, which followed a suspended declaration of independence. Trade shocks produce differential effects depending on market specialization: Respondents working in sectors and at firms specializing in the host state market disproportionately oppose secession, whereas those specializing in foreign markets show no aversion to independence. Exclusion from public insurance strengthens preference for secession among the long‐term unemployed. Support for secession also increases with skill levels but not because of expected postindependence factor returns. The skilled population shows a better understanding of the institutional design of interterritorial redistribution. In a context of autonomy retraction, this group is more skeptical of the accommodation of regional demands within the union. Overall, we advance an individual‐level materialistic approach to the study of secession.