The New Political Economy of Federal Preservation: Insights from Nigerian Federal Practice

Within the last decade, rational choice theorists have been discussing the institutional features of federalism that lead to either system self-reinforcement or collapse. They draw on the early economic theories of Hayek, Musgrave, Oates and Tiebout by emphasising competition and efficiency but go beyond these theories to explain ways that federal governance relates to the market to provide for its own preservation. This essay uses the assumptions and prescriptions of 'the theory of federal preservation' to analyse federal practice in Nigeria and, in turn, uses the Nigerian case information to provide insights into the limits of the theory. The main thesis is that the assumptions and prescriptions of the new political economy are often meaningful. However the emphasis on market efficiency creates practical difficulties for governance.