One Road to Riches?: How State Building and Democratization Affect Economic Development

Building effective state institutions before introducing democracy is widely presumed to improve different development outcomes. Conversely, proponents of this stateness-first argument anticipate that democratization before state building yields poor development outcomes. In this Element, we discuss several strong assumptions that (different versions of) this argument rests upon and critically evaluate the existing evidence base. In extension, we specify various observable implications. We then subject the stateness-first argument to multiple tests, focusing on economic growth as an outcome. First, we conduct historical case studies of two countries with different institutional sequencing histories, Denmark and Greece, and assess the stateness-first argument (e.g., by using a synthetic control approach). Thereafter, we draw on an extensive global sample of about 180 countries, measured across 1789-2019 and leverage panel regressions, preparametric matching, and sequence analysis to test a number of observable implications. Overall, we find little evidence to support the stateness-first argument.