State power, state capacity, and development

Institutions have become the hallmark of development economics (e.g. Sokoloff and Engerman 2000, Acemoglu et al. 2002, Brunnschweiler 2008, Nunn 2008, Galor and Moav 2012, Voth and Voigtlander 2015). The state constitutes a crucial institution driving the development process. This can be seen by the strong parallels in human history between the emergence of mighty states on the one hand and economic, scientific and cultural progress on the other hand (e.g. Ancient Egypt, Classic Greece, Rome). Yet while a powerful state appears as a sine qua non condition of development broadly defined, it is not necessarily tantamount to economic progress and prosperity as exemplified by the numerous mighty autocracies that have undermined their countries’ development in contemporary Sub-Saharan Africa. State power is therefore defined as the state’s ability to broadcast power (military, police), and state capacity captures the capacity of the state to collect taxes and enforce property rights (e.g. Besley and Persson 2010). State power is necessary for a government to develop state capacity, yet it is not necessarily conducive to development-friendly institutions. This short note constitutes a first attempt to clarify the distinction between the two notions, and to hint at the drivers of state power, with a particular emphasis on geography.