State Capacity, Conflict and Development

The absence of state capacities to raise revenue and to supportmarkets is a key factor in explaining the persistence of weak states.This paper reports on an on-going project to investigate the incentiveto invest in such capacities. The paper sets out a simple analyticalstructure in which state capacities are modeled as forward lookinginvestments by government. The approach highlights some deter-minants of state building including the risk of external or internalconflict, the degree of political instability, and dependence on naturalresources. Throughout, we link these state capacity investments topatterns of development and growth.[...]