Abstract
The presence of a state is one of the most reliable historical predictors of social and economic development. In this article, we complete the coding of an extant indicator of state presence from 3500 BCE forward for almost all but the smallest countries of the world today. We outline a theoretical framework where accumulated state experience increases aggregate productivity in individual countries but where newer or relatively inexperienced states can reach a higher productivity maximum by learning from the experience of older states. The predicted pattern of comparative development is tested in an empirical analysis where we introduce our extended state history variable. Our key finding is that the current level of economic development across countries has a hump-shaped relationship with accumulated state history.
Highlights
History has shown that economic development often thrives in states where governments guarantee the rule of law and provide public goods for their citizens
We have presented a model of the role of state history in economic development wherein growing state experience is associated with increases in productivity in the individual country, but where countries with less history of state presence may have a productivity advantage compared to ones with more experience of state institutions
The resulting empirical analysis revealed consistent reduced-form regressions, where a hump-shaped relationship is confirmed between extended Statehist and technology and economic development in 2000 CE
Summary
History has shown that economic development often thrives in states where governments guarantee the rule of law and provide public goods for their citizens. We confirm that the relationship between our state history index and current levels of economic development has the shape of an inverted u, implying that countries with very much or very little state experience have the least developed economies whereas the richest countries have intermediate state history scores. Subsequent versions of the index used in these papers expanded the set of countries, none coded the history of states BCE With these developments in mind and with the new data on the extended state history index, we revisit the relationship between the degree of exposure to state institutions and current output. Accompanying this paper is an extensive online data appendix where we motivate the coding for each country-period observation Another issue concerns the unit of analysis, which is the territory delimited by the modernday country borders of 159 contemporary countries in the sample.
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