Abstract

This Element examines the dynamic relationship between political centralization and fiscal legibility, the ability of central authorities to independently observe, measure, and assess local populations, wealth, and activities for the purposes of taxation and control. Building on recent work (Garfias and Sellars forthcoming, AJPS), we develop a dynamic model of political centralization and exogenous (e.g., geography) and endogenous (e.g., census records) fiscal legibility. As our theory highlights, political centralization and investment in improving fiscal legibility tend to be self-reinforcing. In information-poor areas, rulers are often better off relying on more decentralized institutions that do not involve monitoring tax-collecting intermediaries on a day-to-day basis. There is little incentive for rulers to invest in improving informational capacity under these arrangements as they do not require verifying the performance of intermediaries directly. By contrast, in places where fiscal legibility is sufficiently high, political centralization is advantageous for rulers. With improved information rulers can better identify when intermediaries are performing poorly, allowing them to tighten control and retain a greater share of the resources. Centralization in turn encourages additional investment in improving fiscal legibility to make it easier to independently monitor intermediary performance. This positive feedback implies that a small change in exogenous legibility in either direction can have much larger consequences for the trajectory of later state development. Using the model as a guide, we examine the evolution of political institutions and state investment over the nearly 300-year history of the Spanish colonial state in central Mexico, from the Spanish Conquest in 1519 through the outbreak of the War of Independence in 1810, using a series of related research designs. We then extend our analysis to qualitatively discuss the evolution of centralization and investment in informational capacity in later periods of Mexican political history and in several comparison cases.

Reference

Emily Sellars (Yale University), “Fiscal Legibility and State Development (Elements in Political Economy)”, IAST General Seminar, Toulouse: IAST, June 17, 2025, 11:30–12:30, room Auditorium 4 (First Floor - TSE Building).