State Capacity and Economic Development: A Network Approach
Author(s)Acemoglu, Daron; Garcia-Jimeno, Camilo; Robinson, James A.
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We study the direct and spillover effects of local state capacity in Colombia. We model the determination of state capacity as a network game between municipalities and the national government. We estimate this model exploiting the municipality network and the roots of local state capacity related to the presence of the colonial state and royal roads. Our estimates indicate that local state capacity decisions are strategic complements. Spillover effects are sizable, accounting for about 50 percent of the quantitative impact of an expansion in local state capacity, but network effects driven by equilibrium responses of other municipalities are much larger.
DepartmentMassachusetts Institute of Technology. Department of Economics
American Economic Review
American Economic Association
Acemoglu, Daron, Camilo Garcia-Jimeno, and James A. Robinson. “State Capacity and Economic Development: A Network Approach.” American Economic Review 105, no. 8 (August 2015): 2364–2409. © 2015 American Economic Association
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