One Road to Riches?: How State Building and Democratization Affect Economic Development

Building effective state institutions before introducing democracy is widely believed to improve development outcomes, but evidence suggests that democratization before state building may yield poor results. This Element discusses the assumptions behind the stateness-first argument and critically evaluates the existing evidence base. It then subjects the argument to multiple tests, focusing on economic growth as an outcome, and finds little evidence to support it.

Format: Paperback / softback
Length: 75 pages
Publication date: 07 April 2022
Publisher: Cambridge University Press

Before establishing democracy, it is commonly believed that building strong state institutions will lead to better development outcomes. Conversely, proponents of the "stateness-first" argument argue that democratization before state building can result in poor development outcomes. In this Element, we examine several assumptions underlying this argument and critically evaluate the existing evidence base. Furthermore, we explore various observable implications. We then subject the stateness-first argument to multiple tests, focusing on economic growth as an outcome.

First, we conduct historical case studies of two countries with distinct institutional sequencing histories, Denmark and Greece, and assess the stateness-first argument using a synthetic control approach. Subsequently, we draw on an extensive global sample of approximately 180 countries, spanning from 1789 to 2019, and employ panel regressions, preparametric matching, and sequence analysis to test a range of observable implications.

Overall, our findings indicate little support for the stateness-first argument.

ISBN-13: 9781009054553
Edition number: New ed