Subnational drivers of unequal development: resource curses, social cleavages, and political settlements

Why do distinct regions within nations experience unequal levels of political and economic development? How do social cleavages and resource conflict influence such inequality? How do distributions of power and political settlements shape regional and national constraints, obstacles, and opportunities for development?

Political Settlements are mutual understandings held among powerful parties that they will rely on politics rather than organized violence to settle internal disputes. A settlement’s underlying configuration of power—ranging from multipolar to unipolar—and its social foundation—ranging from narrow to broad—condition developmental prospects by posing distinct sets of collective-action problems. To date, most approaches to political settlement analysis have focused on a nation as the chief unit of analysis. Internal regional differences, however, foster stark disparities. Witness, for example, the contrast between pollical-economic achievement in Bogota as opposed to large segments of rural Colombia that have been enmeshed in civil war for most of the past seven decades.

In this talk, I will extend the political settlements concept in two opposite but complementary directions: (i) regional distinctions, as they interact with social cleavages, and (ii) transnational influences from extractive industries. Using game-theoretic logic, I will discuss microfoundations of social cleavages related to identity concepts and group interactions. Within regions, intra- and inter-group dynamics affect the underpinnings, strength, and reach of political settlements—sometimes generating distinct regional quasi-settlements; sometimes permitting or fostering ‘ungovernable’ areas. The relative presence of subsoil resources influences these dynamics—not only as a source of power for various local and transnational parties, but also as an economic prize that engenders rent-seeking and conflict.

Myriad complex collective-action problems ensue. Yet, the contours of this argument facilitate systematic analysis of regional-national dynamics. The nature and reach of political settlements, along with social cleavages and the relative abundance of subsoil resources point to categories of collective-action problems that pose barriers to and opportunities for development. I will conclude with broad policy implications, noting avenues for policy inquiry rather than specific types of policies or policy proposals.


Bill Ferguson is the Gertrude B. Austin Professor of Economics at Grinnell College, where he has taught since 1989. He is the author of The Political Economy of Collective Action, Inequality, and Development (Stanford University Press, 2020) and Collective Action and Exchange: A Game-Theoretic Approach to Contemporary Political Economy (Stanford University Press, 2013). Both books advance the proposition that successful development requires resolving underlying collective-action problems. The earlier book begins with micro-level foundations of political economy and ends with macro-level attention to knowledge, distributions of power, institutions, and growth. The latter book extends these macro themes by focusing on how distributions of power shape configurations of institutions and associated types of collective-action problems that condition prospects for achieving functional political and economic development.

Professor Ferguson is past Secretary-Treasurer of the Midwest Economics Association and prior chair and founder of Grinnell’s Policy Studies Concentration. After graduating from Grinnell College in 1975, with a B.A. in history, he worked as a neighborhood community organizer in Seattle Washington until 1982, when he shifted to studying economics, receiving his Ph.D. from the University of Massachusetts at Amherst in 1989. His teaching has ranged from institutional political economy, applied game theory, and policy analysis to labor economics, British economic policy, and climate policy. His early publications focused on the wage-productivity gap in the US economy and modeling implicit bargaining power in employment relationships. After 2008, he shifted to institutional political economy and development. While writing his 2013 book, he visited Indiana University’s Workshop in Political Theory and Policy Analysis, where he discussed his 2013 book manuscript with the late Elinor Ostrom.