Measurement and Evolution of State Capacity : Exploring a Lesser Known Aspect of Governance

This paper offers an overview of the strengths and limitations in current empirical research on the measurement of state capacity. The paper also surveys the fast emerging literature on the determinants and effects of state capacity. We argue that existing measures on governance quality used in cross-national research can be usefully exploited to capture different aspects of state capacity. We utilise them to provide stylised facts on its evolution, and that post the end of the Cold War in the early 1990s, developing economies have experienced improvements in legal, administrative and bureaucratic capacity, but the gap with advanced economies is still wide. We note that empirical analysis is constrained by the short temporal coverage of available measures. Future research should also address this, as well as providing a systematic econometric assessment of the determinants of capacity and of its effects on development outcomes, such as health and education, which have not received sufficient scrutiny