Are new democracies with divided government and volatile parties politically ill fated? The literature suggests so, but cases of emergent democracies such as Taiwan and Brazil that face both conditions defy the prediction. This paper explains why: party volatility follows from pursuing distinct executive and legislature agendas under divided government; the political ambition that underlies these conditions sustains democratic and even political performance. We evaluate the argument through government spending in Taiwan. The results corroborate our expectations: they show more parties (...) composing the legislature as government spending favors an executive agenda and neglects a legislative welfare-spending agenda. The findings make three contributions to the literature: first, they reveal a political divide between executive and legislature rather than ideological parties to undercut concerns regarding performance. Second, they demonstrate that the strategic use of government spending to institutionalize party development along an executive agenda fuels party fragmentation. Third, they show that legislators split, switch, or create alternative routes to office in reaction to strategic spending to underscore that ambition underlies party volatility and divided government. (shrink)