American Economic Review Vol. 105 No. 8 2015

State Capacity and Economic Development: A Network Approach

Daron Acemoglu¹; Camilo García-Jimeno²; James A. Robinson³

¹ Department of Economics, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Building E18, Room 269D, Cambridge, MA 02142 (e-mail: ) · ² Department of Economics, University of Pennsylvania, 3718 Locust Walk, McNeil Building, Office 528, Philadelphia, PA 19104 (e-mail: ) · ³ Government Department, Harvard University, 1737 Cambridge Street, Office K309, Cambridge, MA 03138 (e-mail: )

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.

DOI

10.1257/aer.20140044

Volume

105

Issue

8

Pages

2364-2409

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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