State Capacity, Conflict, and Development

TLDR

Weak states persist partly because they lack revenue‑raising and market‑supporting capacities. The study investigates incentives for governments to invest in state capacity. The paper models state capacities as forward‑looking government investments, highlighting determinants such as conflict risk, political instability, resource dependence, and linking these investments to development and growth patterns.

Abstract

The absence of state capacities to raise revenue and to support markets is a key factor in explaining the persistence of weak states. This paper reports on an ongoing project to investigate the incentive to invest in such capacities. The paper sets out a simple analytical structure in which state capacities are modeled as forward looking investments by government. The approach highlights some determinants of state building including the risk of external or internal conflict, the degree of political instability, and dependence on natural resources. Throughout, we link these state capacity investments to patterns of development and growth.