Institution-Building under Foreign Occupations : Lessons from the Colonial Past

This paper seeks to explain variation in state-building outcomes under foreign occupations. Why do some state-building missions produce long-lasting institutional transformation, while others leave a legacy of failed institutions? I explore this question through a comparative study of the American colonization of the Philippines (1898-1941) and the Japanese colonization of Taiwan (1895-1945), which produced contrasting state-building outcomes despite having similar background conditions. In contrast to recent work in post-conflict studies that emphasizes state-building intensity and institutional design, this paper focuses on process - the process through which foreign agents transform war-torn or traditional societies into modern states. I argue that two key factors affect the ability of occupiers to integrate new rules and organizational structures into the existing institutions of a target society to create a functional state: (i) the extent of discretionary authority granted to the occupational regime by its home government and (ii) the ability of native elites to interfere with the institution-building effort. The greater freedom foreign agents have to engage in on-the-ground experimentation, the more likely they are to successfully integrate new institutions into the native social order. However, contrary to conventional wisdom, the most effective institutions emerge when native elites possess the capacity to veto the institution-building program of foreign agents. Only when new institutions are undergirded by the self-serving interests of local powerholders do they become enforceable, for foreign occupiers lack both the manpower and the legitimacy necessary to compel widespread compliance to new rules