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STATE CAPACITY AND ECONOMIC GROWTH: CAUTIONARY TALES FROM HISTORY

Published online by Cambridge University Press:  21 February 2023

Sheilagh Ogilvie
Sheilagh Ogilvie*
Affiliation:
All Souls College, Oxford, United Kingdom
*
E-mail: [email protected]
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Abstract

This paper uses economic history to probe the relationship between state capacity and economic growth during the Great and Little Divergences (c.1500–c.1850). It identifies flaws in the dominant measure of state capacity, fiscal capacity, and advocates instead analysing state expenditures. It investigates five key activities on which states historically spent resources: waging war; providing law and administration; building infrastructure; pursuing industrial policy; and fostering a national culture. The lesson of history, it concludes, is not to build a capacious state. Rather, we need a state that uses its capacity to help (or at least not hinder) market activity.

Keywords

state capacityeconomic historytaxationbureaucracyindustrial policyN40H7H10L50L9
Type
Lecture
Information
National Institute Economic Review , Volume 262 , Autumn 2022 , pp. 28 - 50
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of National Institute Economic Review

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Footnotes

This article is based on the Prais Lecture on Productivity 2021, given on 25 November 2021

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