S7 Ep56: Why democracy alone does not build effective states

Many years ago, Tim Besley (LSE) had a "crazily simplistic" idea to categorise states by their capacity, and in his early work he suggested three groups. When ten years later, he gave an algorithm some data on the measures of state capacity, and left it to categorise states, it also found three groups.Which states are in which groups barely changes. Does that make a country's group its destiny? In the latest VoxDev Talk, based on his lecture in the IGC-BREAD series on political economy, Besley tells Tim Phillips why it does not. But he also explains why giving citizens the power to vote doesn't necessarily help solve the problems that create weak states. The lecture behind this episode:Besley, Tim. 2026. "State Capacity, Conflict and Development." Lecture 4, BREAD-IGC virtual PhD-level course on political economy, 29 September. Lecture slides. Watch the recording: [LECTURE RECORDING URL].The research behind this episode:Besley, Timothy, Chris Dann, and Torsten Persson. 2021. "Pillars of Prosperity: A Ten-Year Update." CEPR Discussion Paper 16256. Gated.Besley, Timothy. 2020. "State Capacity, Reciprocity, and the Social Contract." Econometrica 88 (4): 1307-35.Besley, Timothy, and Torsten Persson. 2011. Pillars of Prosperity: The Political Economics of Development Clusters. Princeton: Princeton University Press.Besley, Timothy, and Torsten Persson. 2010. "State Capacity, Conflict, and Development." Econometrica 78 (1): 1-34.To cite this episode:Phillips, Tim, and Tim Besley. 2026. "Why democracy alone does not build effective states." VoxDev Talks (podcast).About the guestSir Tim Besley is School Professor of Economics and Political Science and W. Arthur Lewis Professor of Development Economics at the London School of Economics and Political Science. He is known for research spanning political economy, development economics and public economics, with a focus on how governments can design and deliver economic policy more effectively. He served on the Bank of England's Monetary Policy Committee from 2006 to 2009 and was an academic director of the LSE-Oxford Commission on State Fragility, Growth and Development. He is a past president of the Econometric Society, the Royal Economic Society, the European Economic Association and the International Economic Association, and is affiliated with the Centre for Economic Policy Research.Research cited in this episodeState capacity. In Besley's work, state capacity has three dimensions. Fiscal capacity is the breadth of the tax system, legal capacity is the ability to enforce contracts and property rights, and collective capacity is the ability to provide services such as health and education. Besley and Persson (2011) built the first two on Adam Smith's recipe for prosperity, "peace, easy taxes, and a tolerable administration of justice".Quasi-voluntary compliance. Margaret Levi's term for what happens when people pay tax because they accept the arrangement, and not only because they fear punishment (Levi, Margaret. 1988. Of Rule and Revenue. Berkeley: University of California Press). Besley (2020) models this as a reciprocal contract; citizens pay their taxes and the state provides public goods.Circular causation. Gunnar Myrdal, who shared the 1974 Nobel Memorial Prize in Economic Sciences with Friedrich Hayek, described development as a system in which "if one changes, others will change in response" (Myrdal, Gunnar. 1974. "What Is Development?" Journal of Economic Issues 8 (4): 729-36). Besley uses the idea as a metaphor for state capacity and development. One does not cause the other; common processes lie behind both.Institutions. Acemoglu, Johnson and Robinson used differences in European settler mortality to estimate the effect of institutions on income (Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91 (5): 1369-1401). Besley's addition is that state capacity moves