States and Markets: The Advantage of an Early Start

Brown University Working Paper No. 2000-12

25 Pages Posted: 13 Dec 2001  

Louis Putterman

Brown University - Department of Economics

Valerie Bockstette

Credit Suisse First Boston

Areendam Chanda

Louisiana State University, Baton Rouge - Department of Economics

Date Written: October 2001

Abstract

States and markets have sometimes been viewed as competitors, but in the last decade, there has been increasing agreement that a capable state can play an important facilitating role in the process of economic development. A number of studies have explored the empirical connection between measures of political stability and bureaucratic competence, on the one hand, and rates of economic growth, on the other. There is some evidence from these, and also arguments at the case study level, that a stable and competent state is indeed a contributing factor in economic growth.

In this short paper, we investigate the possibility that differences not only in state capacity but more broadly, in the capacity to mount an effective drive toward economic development, derive in part from very long run historical processes giving rise to different potentials for growth. We test the idea that more longstanding experience with a national state in the past is associated, in recent times, with (a) greater political stability and better quality government, (b) higher incomes, and (c) faster rates of economic growth.

Keywords: Economic Growth, Economic Institutions

JEL Classification: B52, O40, Z13

Suggested Citation

Putterman, Louis and Bockstette, Valerie and Chanda, Areendam, States and Markets: The Advantage of an Early Start (October 2001). Brown University Working Paper No. 2000-12. Available at SSRN: https://ssrn.com/abstract=293581 or http://dx.doi.org/10.2139/ssrn.293581

Louis G. Putterman (Contact Author)

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3837 (Phone)
401-863-1970 (Fax)

Valerie Bockstette

Credit Suisse First Boston

11 Madison Avenue
New York, NY 10010
United States

Areendam Chanda

Louisiana State University, Baton Rouge - Department of Economics ( email )

Baton Rouge, LA 70803-6308
United States
225-578-3791 (Phone)

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