Working Paper: NBER ID: w15088
Authors: Timothy J. Besley; Torsten Persson
Abstract: We report on an on-going project, which asks a number of questions relevant to the study of state capacity. What are the main economic and political determinants of the state's capacity to raise revenue and support private markets? How do risks of violent conflict affect the incentives to invest in state building? Does it matter whether conflicts are external or internal to the state? When are large states associated with higher income levels and growth rates than small states? What relations should we expect between resource rents, civil wars and economic development? The paper is organized into three main sections: 1. The origins of state capacity, 2. Sate capacity and the genius of taxation, and 3. State capacity and the strategy of conflict. Each of these begins with a specific motivation. A simple model is formulated to analyze the determinants of state capacity in the first section, and modified to address the new issues that arise in subsequent sections. The theoretical results are summarized in a number of propositions. We discuss the implications of the theory, comment on its relation to existing literature, and briefly mention some empiric applications.
Keywords: No keywords provided
JEL Codes: O10; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political stability (P26) | state capacity (H11) |
| inclusiveness in political institutions (D72) | state capacity (H11) |
| resource rents (L72) | state capacity (H11) |
| share of national income not derived from natural resources (D33) | investments in state capacity (H54) |
| wages (J31) | investments in state capacity (H54) |
| value of public goods (H40) | investments in state capacity (H54) |
| political instability (O17) | investments in state capacity (H54) |
| less inclusive political institutions (D72) | investments in state capacity (H54) |