The case of El Salvador illustrates how temporal variation in the strength of government–elite linkages played a role in explaining the difference between a failed attempt in Mauricio Funes’ administration and a successful one in Salvador Sánchez Cerén’s administration. Even in the context of one of the highest levels of violent crime in the world, the country’s first left-of-center administration failed to adopt elite taxes in order to increase public-safety expenditures. It wasn’t until the government formed a coalition with right-of-center parties and linkages with the business sectors improved, that an increased tax burden on the wealthy became possible.

Chapter 3 explains how the conventional crisis-oriented approach in the literature cannot explain variation in efforts to involve elites in the state-building enterprise. Instead, it argues that both demand and supply factors must be taken into account and disaggregates the components of each, including whether elites can satisfy their demand for public goods in the private market, the ideology of the government, and the extent to which linkages between business elites and the government exist. Chapter 3 also evaluates alternative explanations, including the availability of nonfiscal resources such as oil rents and foreign aid and the degree of inequality in society.