How clientelism undermines state capacity: Evidence from Mexican municipalities

Does clientelism perpetuate the weak state capacity that characterizes many young democracies? Prior work explains that clientelistic parties skew public spending to private goods and under-supply public goods. Building on these insights, this article argues that clientelism creates a bureaucratic trap. Governments that rely on clientelism invest in labor-intensive, low-skilled bureaucracies that can design and implement relatively more straightforward distributive policies. Although such bureaucracies are useful to win some elections, they lack the administrative capacity to sustain economic and human development. Empirically, the article examines the wage structure of municipal bureaucracies as a proxy for the personnel’s education and skills in Mexico between 2012 and 2018. During this period, turnover in the party in power in municipalities was frequent, a situation that also allows investigating how resilient the bureaucratic trap is to increased competition. The results show that all political parties invest in labor-intensive, low-skilled bureaucracies. However, the bureaucratic trap has a different grip on the Institutional Revolutionary Party (PRI), a quintessential clientelistic party, compared to other parties. After an electoral turnover, PRI’s bureaucracies have a larger proportion of low-wage personnel compared to the bureaucracies of other parties. Moreover, after an electoral turnover, the PRI allocates more resources to social assistance, subsidies, and internal transfers that are more conducive to clientelism. The overall size of the bureaucracy and the total wage bill are not affected in the same way, suggesting that there is indeed a trade-off between hiring lower and higher skilled employees. While prior work has proposed other clientelism-induced negative equilibria, this article offers a more direct path from clientelism to state capacity. The results help explain why more fiscal resources, political competition, and demand-side strategies to fight vote buying are insufficient and underscore the importance of civil service reform to tame clientelism.