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Economic Diversification, Homogeneity of Interests, and the Impartiality of Government

Can economic diversification constrain elites from shaping government institutions to their own advantage? This chapter reviews scholarly work that suggests it can. Elites frequently use government institutions to cement their position and enrich themselves at the expense of others, but to overcome opposition to their own advancement they must form coalitions. The ability to form coalitions is conditioned by the compatibility of underlying interests; the more diverse the economy, the less cohesive the underlying interests are, making it harder for the elites to form collusive coalitions. This chapter outlines political theory and recent research on the role played by diverse and competing interests in shaping the exercise of government power, democratization, and institutional reform. Considering the sectoral structure of the economy can help us better understand ongoing economic and political processes such as reconcentration of economic activities, the position of transient labor, and state-led efforts for economic diversification.