Notes - Chapter 5: State Spaces

All happy families resemble each other; every unhappy family is unhappy in its own way.

- Leo Tolstoy, 1873-77.

Leo Tolstoy. Credit: F. W. Taylor, Public domain via Wikimedia Commons

Weingast (2005) provides a classification of state types which shares features in common with our approach. These ideas are further refined and developed in North, Weingast and Wallis (2009), which most closely shares the ambition in this chapter of understanding the development of a state where political violence is a possibility. Bates (2001) discusses the links between establishing peace and prosperity in contemporary Africa.

However, to the best of our knowledge, the joint determination of state capacity, political violence and income in an integrated formal framework is new. While many authors have analyzed some of the partial relations in the data, theoretically and empirically, the comprehensive analysis pursued in this chapter does not have any counterpart in earlier research. The closest antecedent known to us is the paper by Caselli (2006) referenced in the text of Section 5.1.2.

The various empirical classifications of countries into weak or fragile states do employ multidimensional criteria, including the main state pathologies we have emphasized here, but often do not make a clear distinction between determinants and outcomes. Rice and Patrick (2008) give an overview of different attempts to measure state weakness or fragility. The heterogeneity of state pathologies and the link to political institutions is recognized by Vallings and Moreno-Torres (2005).

This chapter is related to the large literature on the resource curse. Mehlum, Moene and Torvik (2006) offers an approach which is intellectually related to the one taken here, linking these arguments to the quality of institutions, theoretically and empirically. The seminal empirical paper on the resource curse, as a problem for income, is Sachs and Warner (2001) (see also Sachs and Werner, 1995). Torvik (2002) formalizes this argument using a rent-seeking framework, while Robinson, Torvik and Verdier (2006) take a political economics approach. Torvik (2009) and van der Ploeg (2011) provide useful overviews of the state of knowledge, and Humphreys, Sachs and Stiglitz (2007) contains a recent collection of essays on the resource curse.

Our discussion in Section 5.2 of how conflict affects investment is linked to the literature on the impact of civil conflict on incomes. Evidence on the negative impact on economic activity and well-being of conflict in various contexts can be found, for example, in Abadie and Gardeazabal (2003), Besley and Mueller (2010), Blomberg and Hess (2002), Collier (1999), Coyne, Dempster, and Isaacs (2010), Goldin and Lewis (1975), Skaperdas (2010), and Zussman, Zussman and Orregaard Nielsen (2008).