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State Capacity in Latin America

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  • Mauricio Cardenas

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Abstract

"State capacity is exceptionally low in Latin America, even when compared to other former colonies. This paper analyzes four possible factors that could potentially explain this troubling feature: political inequality, economic inequality, interstate conflict and civil war. With the exception of external war, these variables have a negative effect on state-building in models where the accumulation of state capacity is analogous to investment under uncertainty. These analytical predictions are then tested with cross-country data, paying special attention to Latin America. Democracy´s impact on state capacity is quite positive, as is the effect of the frequency of external wars when data for the last century is used. However, in the data for the last half century, external wars have little effect, but the negative effects of internal wars and income inequality become highly significant. The model explains why Latin America has failed to develop its state, despite the improvement in the various measures of democracy. In fact, both the theoretical model and the empirical evidence suggest that the effects of democracy are undermined in the presence of high economic inequality."

Suggested Citation

  • Mauricio Cardenas, 2010. "State Capacity in Latin America," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 1-45, January.
  • Handle: RePEc:col:000425:008591
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    File URL: http://economia.lacea.org/contents.htm
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    Cited by:

    1. Cingolani, Luciana & Thomsson, Kaj & de Crombrugghe, Denis, 2015. "Minding Weber More Than Ever? The Impacts of State Capacity and Bureaucratic Autonomy on Development Goals," World Development, Elsevier, vol. 72(C), pages 191-207.
    2. Cingolani L, 2013. "The State of State Capacity : a review of concepts, evidence and measures," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Richard M. Bird & Eric M. Zolt, 2014. "Taxation and inequality in the Americas: Changing the fiscal contract?," Chapters,in: Taxation and Development: The Weakest Link?, chapter 7, pages 193-237 Edward Elgar Publishing.
    4. Carbonetti, Benjamin & Pomeroy, Robert & Richards, David L., 2014. "Overcoming the lack of political will in small scale fisheries," Marine Policy, Elsevier, vol. 44(C), pages 295-301.

    More about this item

    Keywords

    State capacity; political inequality; economic inequality; interstate conflict; ciil war; Latin America;

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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