Jonathan Hanson has a paper coming out in the International Studies Quarterly (ISQ) titled “Forging then Taming Leviathan: State Capacity, Constraints on Rulers, and Development.” The article shows that countries with low levels of GDP per capita are aided by strong states rather than harmed by them. As Hanson writes:
The New Institutional Economics (NIE) has been unambiguously successful in creating consensus that institutions are an important determinant of economic performance. The centrality of property rights in NIE theory, however, has made constraints on rulers a focal point in the empirical literature. The result has been a “preoccupation of the institutional economics literature with institutions of protecting property rights” (Bardhan 2005:17) that treats the “formal institutions of property rights protection as the end-all of development policy” (Rodrik 2007:184). States also have roles as a guarantor of order, a provider of public goods, an agent for mobilizing capital, and a regulator of markets. These roles have clearer links to state capacity than to constraints on rulers, and it is at least plausible that checking the power of rulers could undermine the state’s ability to carry out these functions.
Institutional checks and balances have no effect–positive or negative–on economic development in the states examined.
States can steal, but they are critical to creating the order that allows individuals to live in peace and to invest in a brighter future.