State Capacity and Economic Development: A Network Approach

Daron Acemoglu, Camilo García-Jimeno and James Robinson

American Economic Review, 2015, vol. 105, issue 8, 2364-2409

Abstract: We study the direct and spillover effects of local state capacity in Colombia. We model the determination of state capacity as a network game between municipalities and the national government. We estimate this model exploiting the municipality network and the roots of local state capacity related to the presence of the colonial state and royal roads. Our estimates indicate that local state capacity decisions are strategic complements. Spillover effects are sizable, accounting for about 50 percent of the quantitative impact of an expansion in local state capacity, but network effects driven by equilibrium responses of other municipalities are much larger. (JEL D85, H41, H77, O17, O18)

JEL-codes: D85 H41 H77 O17 O18 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20140044
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Citations: View citations in EconPapers (203)

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Working Paper: State Capacity and Economic Development: A Network Approach (2014)
Working Paper: State Capacity and Economic Development: A Network Approach (2014)
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