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State Capacity, Conflict and Development

  • Timothy Besley
  • Torsten Persson

We report on an on-going project, which asks a number of questions relevant to thestudy of state capacity. What are the main economic and political determinants ofthe state's capacity to raise revenue and support private markets? How do risks ofviolent conflict affect the incentives to invest in state building? Does it matterwhether conflicts are external or internal to the state? When are large statesassociated with higher income levels and growth rates than small states? Whatrelations should we expect between resource rents, civil wars and economicdevelopment? The paper is organized into three main sections: 1. The origins of statecapacity, 2. Sate capacity and the genius of taxation, and 3. State capacity and thestrategy of conflict. Each of these begins with a specific motivation. A simple modelis formulated to analyze the determinants of state capacity in the first section, andmodified to address the new issues that arise in subsequent sections. The theoreticalresults are summarized in a number of propositions. We discuss the implications ofthe theory, comment on its relation to existing literature, and briefly mention someempiric applications.

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Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economic Organisation and Public Policy Discussion Papers Series with number 010.

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Date of creation: Jun 2009
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Handle: RePEc:cep:stieop:010
Contact details of provider: Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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  8. Timothy J. Besley & Torsten Persson, 2008. "The Incidence of Civil War: Theory and Evidence," NBER Working Papers 14585, National Bureau of Economic Research, Inc.
  9. Christopher Blattman & Edward Miguel, 2009. "Civil War," NBER Working Papers 14801, National Bureau of Economic Research, Inc.
  10. Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
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  11. Timothy Besley & Torsten Persson, 2009. "Repression or civil war?," LSE Research Online Documents on Economics 33748, London School of Economics and Political Science, LSE Library.
  12. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
  13. Collier, Paul & Hoeffler, Anke, 2000. "Greed and grievance in civil war," Policy Research Working Paper Series 2355, The World Bank.
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  16. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  17. Torsten Persson & Gerard Roland & Guido Tabellini, . "Comparative Politics and Public Finance," Working Papers 114, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  18. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  19. Daron Acemoglu, 2002. "Why Not a Political Coase Theorem? Social Conflict, Commitment and Politics," NBER Working Papers 9377, National Bureau of Economic Research, Inc.
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  22. Nicholas Sambanis, 2002. "A Review of Recent Advances and Future Directions in the Quantitative Literature on Civil War," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(3), pages 215-243.
  23. Timothy Besley & Torsten Persson, 2008. "Wars and State Capacity," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 522-530, 04-05.
  24. Barro, Robert J. & Sala-i-Martin, Xavier, 1992. "Public Finance in Models of Economic Growth," CEPR Discussion Papers 630, C.E.P.R. Discussion Papers.
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