...a large body of work in political science, especially in the context of African politics, views the main barrier to economic development not as the strength of the state, but as lack of state capacity, state power or monopoly over violence. Political scientists and sociologists have coined the term weak state to describe such situations in which the state has a limited capacity to tax and regulate, and consequently, they argue, to play a developmental role.4 Migdal (1988, p. 33), for example, remarks: In parts of the Third World, the inability of state leaders to achieve predominance in large areas of their countries has been striking… The ineffectiveness of state leaders who have faced impenetrable barriers to state predominance has stemmed from the nature of the societies they have confronted—from the resistance posed by chiefs, landlords, bosses, rich peasants, clan leaders ... the state, with its monopoly of legitimate violence in society, has an important role to enforce contracts and reduce transaction costs. ... Nevertheless, an analysis of the trade-off between the distortions that emerge from the taxation power of the state run by self-interested elites and the inefficiencies due to limits [on] state power has not been undertaken. ... The main argument of the paper is that both weak and strong states create distortions in the allocation of resources, and consequently, both excessively weak and excessively strong states are likely to act as impediments to economic development. While strong states tend to impose high taxes, discouraging investment and entrepreneurial effort by the citizens, weak states fail to invest in public goods such as infrastructure, roads, legal rules for contract enforcement, etc. Weak states underinvest in public goods because self-interested political elites undertake investments only when they expect future private rewards, and when the state is weak, they can appropriate fewer rewards in the future. The key for this result is that the state also takes actions that are important for the efficient functioning of the economy; this necessitates an organization of society that provides the right incentives to the self-interested agents controlling the state. sciencedirect/science/article/pii/S0304393205000838
Posted on: Tue, 20 Jan 2015 07:41:14 +0000