Three Essays on State Capacity

This dissertation involves three essays on state capacity. The first essay presents a formal model of state building as a domestic bargaining game between local elite and central ruler to explore the relationship between warfare and fiscal centralization. In this study, I show that the central ruler’s future expectations are a key determinant of the chosen method of fiscal expansion under war pressure. Fiscal decentralization, rather than fiscal centralization, is more likely when wars create a high survival threat for the ruler. The Ottoman Empire in the nineteenth century is used as a case study to demonstrate the results of the model. The second essay analyzes the historical determinants of state capacity by looking at the interactions between early statehood and the colonial period experiences. Using ordinary least squares and instrumental variables regressions on a cross-country dataset of colonized and non-colonized countries, I find that the impact of early (pre-1500) statehood on current state capacity is conditional on colonization. Early statehood is positively associated with state capacity for non-colonized countries while it is negatively associated with state capacity for colonized countries. The final essay analyzes the relationship between bureaucratic quality, democracy and trade liberalization. In this essay, I argue that bureaucratic quality shapes the effect of democracy on trade liberalization because bureaucrats play an active role in the trade policymaking process when bureaucratic quality is high. Using panel data, I find evidence in line with existing arguments that democracy is positively correlated with trade liberalization. However, this effect only exists in countries with low levels of bureaucratic quality. When bureaucratic quality is high, the relationship between the level of democracy and trade liberalization weakens