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State Capacity and Military Conflict

  • Nicola Gennaioli
  • Hans-Joachim Voth

In 1500, Europe was composed of hundreds of statelets and principalities, with weak central authority, no monopoly over the legitimate use of violence, and multiple, overlapping levels of jurisdiction. By 1800, Europe had consolidated into a handful of powerful, centralized nation states. We build a model that simultaneously explains both the emergence of capable states and growing divergence between European powers. In our model, the impact of war on the European state system depends on: i) the importance of money for determining the war outcome (which stands for the cost of war), and ii) a country's initial level of domestic political fragmentation. We emphasize the role of the "Military Revolution", which raised the cost of war. Initially, this caused more internally cohesive states to invest more in state capacity, while other (more divided) states rationally dropped out of the competition. This mechanism leads to both increasing divergence between European states, and greater average investments in state building on the continent overall.

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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 593.

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Date of creation: Sep 2015
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Handle: RePEc:bge:wpaper:593
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  1. J. Bradford De Long & Andrei Shleifer, 1993. "Princes and Merchants: European City Growth before the Industrial Revolution," NBER Working Papers 4274, National Bureau of Economic Research, Inc.
  2. Enrico Spolaore & Romain Wacziarg, 2012. "War and Relatedness," Discussion Papers Series, Department of Economics, Tufts University 0769, Department of Economics, Tufts University.
  3. Landers, John, 2003. "The Field and the Forge: Population, Production, and Power in the Pre-industrial West," OUP Catalogue, Oxford University Press, number 9780199249169.
  4. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World
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  5. Dincecco, Mark, 2009. "Fiscal Centralization, Limited Government, and Public Revenues in Europe, 1650–1913," The Journal of Economic History, Cambridge University Press, vol. 69(01), pages 48-103, March.
  6. Reinhart, Carmen, 2004. "Debt intolerance: Executive summary," MPRA Paper 13398, University Library of Munich, Germany.
  7. Hans-Joachim Voth, 2013. "The Three Horsemen of Riches: Plague, War, and Urbanization in Early Modern Europe," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 774-811.
  8. Drelichman, Mauricio & Voth, Hans-Joachim, 2010. "The Sustainable Debts of Philip II: A Reconstruction of Castile's Fiscal Position, 1566–1596," The Journal of Economic History, Cambridge University Press, vol. 70(04), pages 813-842, December.
  9. Mauricio Drelichman & Hans-Joachim Voth, 2008. "Debt Sustainability in Historical Perspective: The Role of Fiscal Repression," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 657-667, 04-05.
  10. Karaman, K. Kivanç & Pamuk, Şevket, 2010. "Ottoman State Finances in European Perspective, 1500–1914," The Journal of Economic History, Cambridge University Press, vol. 70(03), pages 593-629, September.
  11. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
  12. Brewer, Anthony A, 1988. "Edward West and the Classical Theory of Distribution and Growth," Economica, London School of Economics and Political Science, vol. 55(220), pages 505-15, November.
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