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Title: State Capacity and Military Conflict

Author(s): Nicola Gennaioli and Hans-Joachim Voth

Publication Date: December 2011

Keyword(s): ethnicity, fragmentation, military conflict, state capacity, taxation and war

Programme Area(s): International Macroeconomics

Abstract: In 1500, Europe was composed of hundreds of statelets and principalities, with weak central authority, no monopoly over the legitimate use of violence, and multiple, overlapping levels of jurisdiction. By 1800, Europe had consolidated into a handful of powerful, centralized nation states. We build a model that simultaneously explains both the emergence of capable states and growing divergence between European powers. In our model, the impact of war on the European state system depends on: i) the importance of money for determining the war outcome (which stands for the cost of war), and ii) a country's initial level of domestic political fragmentation. We emphasize the role of the 'Military Revolution', which raised the cost of war. Initially, this caused more internally cohesive states to invest more in state capacity, while other (more divided) states rationally dropped out of the competition. This mechanism leads to both increasing divergence between European states, and greater average investments in state building on the continent overall.

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Bibliographic Reference

Gennaioli, N and Voth, H. 2011. 'State Capacity and Military Conflict'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8699