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The Political Economy of Fiscal Institutions and Macroeconomic Management in Sudan

This chapter draws on the literature on historical institutionalism and distributive politics, combining qualitative and quantitative information from Sudan’s territorial economic structures, to highlight the evolution of the fiscal and political institutions and indicate their impact on fiscal policy and macroeconomic outcomes. The results show that the inherited colonial fiscal institutions, underpinned by cotton production partnership, significantly determined Sudan’s economic development path after independence and facilitated the incorporation of rural areas and communities into the national economy. However, the greater centralization of power to boost the elites’ legitimacy, including the prioritization of public expenditures on entrenched and inefficient political patronage networks, have not only undermined the macroeconomic management role of the fiscal policy, but also triggered a process of territorial fragmentation that escalated into open civil wars and eventually led to the breakup of the state. The policy implications of these findings are outlined.