Public good or public bad? Indigenous institutions and the demand for public goods

This paper argues that the underprovision of public goods can be partly explained by a lower demand from Indigenous groups with high preferences for Indigenous identity and high capacity to coordinate. We assess this argument in the context of the Mexican Revolution (1920s-1950s), when the new state used the creation of a public-road network as a tool for nation-building. Exploiting heterogeneity in the share of Indigenous people who descend from politically centralised societies in pre-colonial times at the municipal level, we analyse its effects on the expansion of roads in a difference-in-differences setting. We find that pre-colonial centralisation is associated with less road infrastructure. Evidence shows that results are driven by better capacities to coordinate collective actions and higher preferences for preserving Indigenous identity. Finally, we provide evidence that where road building was less successful, economic outcomes are worse today.