State Capacity and Long-Run Economic Performance
Katz, Gabriel; Dincecco, Mark
Date: 1 October 2015
Journal
Economic Journal
Publisher
Royal Economic Society
Publisher DOI
Abstract
We present new evidence about the long-run relationship between state capacity { the
scal and administrative power of states { and economic performance. Our database is novel
and spans 11 European countries and 4 centuries from the Old Regime to World War I. We
argue that national governments undertook two political transformations ...
We present new evidence about the long-run relationship between state capacity { the
scal and administrative power of states { and economic performance. Our database is novel
and spans 11 European countries and 4 centuries from the Old Regime to World War I. We
argue that national governments undertook two political transformations over this period:
fi scal centralisation and limited government. We fund a signifi cant direct relationship between
fiscal centralisation and economic growth. Furthermore, we fi nd that an increase in the state's
capacity to extract greater tax revenues was one mechanism through which both political
transformations improved economic performance. Our analysis shows systematic evidence that
state capacity is an important determinant of long-run economic growth.
Social and Political Sciences, Philosophy, and Anthropology
Faculty of Humanities, Arts and Social Sciences
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