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Why (except Puerto Rico), is no US state or territory is dominated by local parties, different from Democratic and Republican parties?

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Basically, it's only unique to Puerto Rico due to its statehood status. Parties in Puerto Rico tend to align around the status of the territory and questions of statehood and independence and Puerto Ricans vote for the party which best represent their views, which is why only Puerto Rico is dominated by local parties. Both the Democratic and the Republican parties don't have a clear and explicit stand on this issue.

The major parties in Puerto Rico are the -

This article by The Hill explains:

Although Puerto Rican political parties also aren’t defined by the typical socio-economic concerns that drive allegiance to our Republican and Democratic parties, choosing instead to divide (and divide they emphatically do) along the lines of their preference towards the island’s future status as a state, independent nation, or more refined status quo, liberal and conservative ideologies still pervade local politics.

(emphasis mine)

This article sums it up:

Puerto Rico’s main political parties are local parties organized around different visions of the territory’s ultimate political status — statehood, independence, and a proposal for a “Commonwealth” status that Federal officials of both national political parties have said is impossible for constitutional and other reasons.

(emphasis mine)

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  • But in other states there could be other dividing issues as well, such as question about joining to a neighbor state or Native American reservation status or religious/race/LGBT questions etc. Still, all states are dominated by two main parties. – Anixx Jun 13 '17 at 9:55
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    @Anixx But Democrats and Republicans have clear stands on most of the religious/race/LGBT issues. The rest just aren't issues big enough for local parties to gain support. – Panda Jun 13 '17 at 9:57
  • I think Democrats also have stance on statehood of Puerto Rico (support it) while the Republicans mostly against. – Anixx Jun 13 '17 at 10:04
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    @Anixx Not really. In addition, the Republican Party platform includes supporting language for Puerto Rico’s self-determination that also urges Congress to approve legislation admitting Puerto Rico as a state based on the 2012 plebiscite. - NBC article – Panda Jun 13 '17 at 10:06
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    @Anixx: While there theoretically could be such dividing issues, and there have been in the past (the Civil War being the most notable), in actual practice there really aren't any at the present time. Local issues tend to be outweighed by national ones, so a party that focussed on just a local issue would attract votes only from those to whom that issue was the primary concern. – jamesqf Jun 18 '17 at 19:06
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@Panda's answer already covered the reasons behind the popularity of local parties in Puerto Rico. In my answer, I'll try to describe the differences (or lack thereof) between Puerto Rico and other US states/territories.

Why ... no US state is dominated by local parties

Unlike the states, Puerto Rico has no influence on US Congress. Puerto Rico has only one non-voting representative in the House. This leads to the following consequences:

  • Lack of interest from major parties

There is little incentive for major parties to invest in Puerto Rico politics as winning Puerto Rico elections won't help Republican or Democrats to push their legislative agenda in US House or Senate. As it seems, neither party has an intent to dominate in the local legislature.

  • Lack of interest from citizens

Since their votes have little effect on the decisions of US Congress, the citizens of Puerto Rico don't really need to stick to one of the major parties.

Why except Puerto Rico, no US territory is dominated by local parties

This statement doesn't seem to hold up to the facts. Legislative branches in US territories tend to differentiate from one another in structure and composition:

As you can see, of all territories only Guam has a two-party system dominated by the main parties (their local versions, to be clear). So, Puerto Rico's party system is not an exception.

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    Also Minnesota is divided between the Republican Party and the Democratic–Farmer–Labor Party. And there's the Vermont Progressive Party. – Colin Jun 18 '17 at 1:49
  • @ColinZwanziger: Minnesota's DFL party is a branch of the national Democratic party, which happens to have a different name for historical reasons (merger with a popular third party in 1944). Same with the Dem-NPL party in North Dakota. – dan04 Jun 18 '17 at 5:18
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The near-universal use of the Plurality voting system in US elections ensures that all 50 states are dominated by a two-party system, per Duverger's Law. This, in itself, doesn't explain why it's the same two parties in each state. After all, Canada and the UK also use Plurality voting, but they have strong regional parties (Bloc Québécois, Scottish National Party).

But in contrast to the Westminster system, the US system of government features the (almost) direct election of a powerful federal president. And presidential candidates are the de facto spokespeople of their respective parties. This makes it harder for regional parties (unless they have ambitions of winning the presidency) to get recognition.

Puerto Rico and the other non-state island territories do not participate in federal elections, so this argument doesn't apply to them.

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