State Capacity and Economic Development: A Review
A synthesis of the literature connecting bureaucratic capacity, institutional trust, and long-run growth.
- Institutions
- Political Economy
- Development
The relationship between state capacity and economic development has moved from the margins to the centre of comparative political economy. This review traces how scholars have defined capacity, from fiscal extraction to the Weberian quality of the bureaucracy, and how those definitions shape empirical findings.
A recurring theme is the difficulty of separating cause from consequence. Wealthier states can afford more capable administrations, while capable administrations tend to generate growth. I survey the identification strategies used to address this endogeneity, including historical instruments and natural experiments.
I conclude that while the field has converged on the importance of capacity, it remains fragmented on measurement. Future work would benefit from shared indicators and from taking sub-national variation more seriously.