State Capacity and Development

forthcoming

State capacity — the ability of the state to raise revenue and provide public goods — is considered essential for economic development. This ability is still lacking in many developing countries today, and important lessons can be drawn from countries that have been successful in developing an effective state in the past. The over-arching goal of STATE-DEV is to advance our understanding of the development of state capacity, with particular emphasis on three essential pillars: 1) the drivers of demand for state capacity; 2) the quality of the state's bureaucracy, a crucial element of the supply side of state capacity; 3) the institutional elements that facilitate or hinder corruption in the operations of the state. To reach this goal, I undergo large data collection efforts to assemble groundbreaking new data mapping the presence of the state across space and time in two historical settings – Italy and the United States between the second half of the 19th century and the first half of the 20th century – characterized by a rapid growth in the size and reach of the state. By leveraging historical natural experiments, the proposal establishes causal relationships and sheds light on the mechanisms shaping the evolution of state capacity over a long time horizon. STATE-DEV is composed of three projects. Project 1 investigates the factors affecting citizens’ demand for more state presence in their community, focusing on the role of technological change and of immigration. Project 2 studies the impacts of individual bureaucratic leaders on the evolution of state capacity and economic development. Project 3 analyses the effects of the revolving door between the bureaucracy and the private sector on firms’ dynamics in the short and long run. STATE-DEV speaks to economists, political scientists and historians, and wants to inform important public debates about the conditions enabling the development of an effective state, and its impact on economic development.