This paper was the basis for Persson's Presidential Address to the Econometric Society in 2008. We are grateful to a co-editor and four referees, as well as a number of participants in regional meetings for comments. We thank David Seim and Prakarsh Singh for research assistance, and CIFAR, ESRC, and the Swedish Research Council for financial support.
State Capacity, Conflict, and Development
Article first published online: 8 FEB 2010
© 2010 The Econometric Society
Volume 78, Issue 1, pages 1–34, January 2010
How to Cite
Besley, T. and Persson, T. (2010), State Capacity, Conflict, and Development. Econometrica, 78: 1–34. doi: 10.3982/ECTA8073
- Issue published online: 8 FEB 2010
- Article first published online: 8 FEB 2010
- Manuscript received August, 2008; final revision received October, 2009.
- State building;
- civil war;
- weak states
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.