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An empirical analysis of state fragility and growth: the impact of state ineffectiveness and political violence
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Abstract(s)
The role of the state in promoting development is well established in the institutional
economics literature. Yet, in recent decades the attention has been turned to the opposite side of
the spectrum. Facing high levels of poverty and showing a slower progress in achieving
development outcomes, fragile states raised concerns among the development community, which
felt urged to assist them. However, the quantitative empirical literature examining the link between
state fragility and development is still relatively scanty. This paper sheds light on this issue by
proposing an approach that comprises indicators for state ineffectiveness and political violence as
two dimensions of state fragility, and by using data for the period 1993–2012 in order to
understand their impact on growth. The results from standard econometric methods suggest that
there is a significant negative effect of state ineffectiveness on economic growth, whereas they fail
to find any significant impact of political violence.
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Keywords
State fragility State ineffectiveness Political violence Economic growth OLS IV