This article explains the dissolution of Czechoslovak federation. It shows that the breakdown in bargaining between Slovakia and the federal center in Prague resulted from the federal institutional framework, differences in fiscal policy preferences and elite patronage incentives to monopolize the spoils of state property sell‐offs. Relatively less developed minority regions often seek greater autonomy in order to redress their economic backwardness through interventionist economic and social policies. Due to its veto powers, Slovakia was able to block central legislation, setting the stage for the divorce. At the same time, the federal government in the center was committed to a laissez‐faire strategy of governance, which precluded any significant accommodation of the periphery. (Mostly) Czech politicians understood that yielding to Slovak claims would threaten to undercut their pro‐market strategy and diminish Prague's exclusive access to the spoils of market reforms. In terms of the bargaining model, the center was not dependent on the periphery, which possessed a credible exit option. In fact, the periphery was perceived as a hindrance to the center's ability to pursue its fiscal goals and a fast economic transition, and as limiting Prague's exclusive access to a nascent revolving door between the upper echelons in politics and business.
- federal institutions
- economic reforms