Essays on the Economics of Statelessness and State Formation

Working Paper
Published on 7 July 2014


This dissertation empirically examines economic exchange in the absence of the state. Analyzing stateless economies is important because traditional economic analysis focuses on an environment in which states are able to enforce property rights, but functioning states are anomalous in the development process and in many developing countries today (Bates, 2011). Standard notions and results of economics may thus not be useful for a large part of the development process (Grossman, 1999). However, in the absence of the state, there is also no systematic data collection capacity. There is therefore no econometric evidence of stateless economies.
In order to observe economic exchange in the absence of a state, Sanchez de la Sierra (2014) focuses on a present-day collapsed state: the Democratic Republic of the Congo (DRC). As a foundation for this dissertation, he managed a team of 12 surveyors, as well as a team of 20 traders to collect data on economic exchange in areas of the Eastern provinces of the DRC that are removed from the central state. Eastern DRC is a well suited location to observe economic behavior in the absence of a functioning state, because the state is unable to operate in large areas. This is a major reason why the DRC is considered the second weakest state in the world, as well as a "failed state". Lacking a state to protect property rights and provide a judicial system, the economy in the East has organized informally. Non-state actors regularly use coercion to define property rights. Contracts are enforced under the threat of social sanctions, or the threat of violence by village armed men who administer disputes.


Raúl Sánchez de la Sierra

University of California, Berkeley