IDEAS home Printed from
   My bibliography  Save this paper

External Threats, Political Stability and Fiscal Capacity


  • Hector Galindo-Silva


In most of the recent literature on state building, the signi cance of war relies on the assumption that interstate disputes and civil wars are two independent types of con icts, with opposing effects on the development of state capacity; while external con icts imply unity and consensus, internal wars are divisive and destructive. This paper contributes to this literature by developing an alternative explanation based on the idea that the actors in these two types of con icts might be linked. A rst result shows that the strength of this link determines whether con icts fought against internal adversaries (i.e. civil wars) or external enemies (i.e. interstate disputes) complement or substitute each other, leading to larger or smaller investments in scal capacity. The theory also predicts that political stability plays a non-trivial role in channelling the relation between both kinds of con icts and scal capacity. A second result shows that while less political stability translates into less scal capacity, more stability does not automatically imply more state-building. The exact relation depends on how cohesive institutions are. A novel mechanism through which more political stability might imply less state-building is proposed. Finally, I show that correlations in cross-country data are consistent with the theory.

Suggested Citation

  • Hector Galindo-Silva, 2017. "External Threats, Political Stability and Fiscal Capacity," Vniversitas Económica 15496, Universidad Javeriana - Bogotá.
  • Handle: RePEc:col:000416:015496

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Fiscal capacity; political stability; interstate conicts; civil war;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000416:015496. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mayerly Galindo Rodriguez (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.