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What determines administrative capacity in developing countries?

Roberto Ricciuti (), Antonio Savoia and Kunal Sen ()
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Antonio Savoia: University of Manchester

International Tax and Public Finance, 2019, vol. 26, issue 5, 972-998

Abstract: Abstract While it is recognised that effective state institutions are pivotal for economic development, their origins and what explains their cross-country differences are not well understood. We focus on the quality of budgetary institutions in developing economies, as efficient public financial planning in such countries is crucial for public goods and services provision. We argue that political institutions, seen as the system of checks and balances on the executive, are a key ingredient for building such capacity. Exploiting a recent database on public financial management performance in developing economies and an instrumental variable strategy, we generally find that stronger constraints on the executive have a positive effect on the ability of states to design, implement and monitor their budget. Our findings are robust to different specifications, controls and estimation methods.

Keywords: State capacity; Administrative capacity; Constraints on the executive; Public finance management; Economic development; Budgetary institutions (search for similar items in EconPapers)
JEL-codes: H61 H83 P48 N46 N47 (search for similar items in EconPapers)
Date: 2019
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