States and economic growth: Capacity and constraints

State capacity has become one of the most discussed concepts in development economics and political economy. In this survey we argue that the study of economic history provides vital insights into the process through which modern states have acquired ‘state capacity’. By evaluating the process of state building across a range of different countries in Europe and Asia, we are able to ‘decompress’ the relationship between state capacity and economic growth. Our analysis emphasizes the variegated nature of the state building process. We focus on recent research that helps to elucidate the mechanisms that relate state capacity to economic growth.