State capacity and economic development: Causal mechanism or correlative filter?

Vincent J. Geloso, Alexander W. Salter

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

In this paper, we explore why there are no examples of societies with low state capacity and high economic development. We argue that such an outcome is unlikely because of the nature of investments in state capacity. Societies that become rich in the absence of a strong state invite predation by societies that develop such states. Thus societies invest in state capacity, in part, to plunder other societies’ wealth. Those investments are a form of rent-seeking. Potentially preyed-upon societies are forced to invest in state capacity in turn so as to deter potential attackers. This entails that as soon as a rent seeker enters the game, the likelihood of a low-capacity, high-development society surviving falls. This explains the historical lack of such societies. We thus interpret state capacity not as a causal condition for widespread economic prosperity, but a survivability condition for enjoying this prosperity.

Original languageEnglish
Pages (from-to)372-385
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume170
DOIs
StatePublished - Feb 2020

Keywords

  • Economic development
  • Public Goods
  • State capacity

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