In Latin American democracies, many provinces and states display autocratic characteristics that are at odds with the national democratic context. The literature on subnational authoritarianism has cope with this puzzle, but the explanations rely mostly on the political and economic role of the national government. In order to explain the emergence and resilience of autocratic subnational governments, I present a theory that looks into the internal dynamics. I argue that subnational autocracies are possible in a context of low economic diversification. Undiversified economies with a dominant economic sector create a network of interests aligned with the incumbent and reduce the support for the opposition parties. In more diversified economies the inter-capitalist competition transfers economic actors’ demands to the political arena, financing opposition parties whenever they feel they are being unheard. I find evidence to support my argument and flesh out the mechanisms at work in a “most similar case” comparison of two neighboring states in Brazil: Bahia and Minas Gerais.
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