origins of state capacity
Subtitle: property rights, taxation, and politics
By: Timothy Besley, Torsten Persson.
Contributors: Persson, Torsten.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13028.; Working paper series (National Bureau of Economic Research) -- working paper no. 13028.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 38
Subjects: Public institutions -- Economic aspects; Public institutions -- Political aspects; Political development; Economic development
Description: Economists generally assume the existence of sufficient institutions to sustain a market economy and tax the citizens. However, this starting point cannot easily be taken for granted in many states, neither in history nor in the developing world of today. This paper develops a framework where "policy choices", regulation of markets and tax rates, are constrained by "economic institutions", which in turn reflect past investments in legal and fiscal state capacity. We study the economic and political determinants of these investments. The analysis shows that common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity. Preliminary empirical evidence based on cross-country data find a number of correlations consistent with the theory.
Notes: "April 2007"

Includes bibliographical references (p. 36-38).

Also available in PDF from the NBER World Wide Web site (www.nber.org)..