AbstractScholars have often dismissed the effect of war on state formation in regions like Latin America, where mobilization for war is deemed insufficiently intense and international conflict fails to out‐select weaker states. Against this conventional wisdom, I contend that wars can affect state‐building trajectories in a postwar period through the different state institutions that result from victory and defeat. After reconsidering the role of war outcomes in classical bellicist theory I use difference‐in‐differences analysis to identify the effect of losing vis‐à‐vis winning a war on levels of state capacity in a panel of Latin America (1865–1913). I then illustrate my causal mechanisms in case studies of the Paraguayan War (1864–1870) and the War of the Pacific (1879–1883) and apply the synthetic control method to these cases. Although out‐selection of losers obscures the effect of war outcomes in European history, Latin America illuminates their long‐term consequences.
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