Anatomy of a Premodern State

We provide a blueprint for the construction of historical state capacity measures for premodern states, which has several advantages over the state of the art. First, we argue that nominal GDP is the best deflator for state revenues. Second, expenditure patterns have to be considered in order to assess changing state capacity. Third, we argue that local-level revenues matter when establishing state capacity, even if their overall contribution appears small. As an application, we tackle the controversial case of Portugal (1367–1844) and show that the country had a relatively high comparative fiscal capacity and its state capacity increased over time as military expenses rose, whereas redistribution favoring the elites and the royal household decreased. This means that state capacity was not an issue in Portugal’s dismal economic performance.