Francis Fukuyama Quote

Between state building and economic growth Having a state is a basic precondition for intensive economic growth. The economist Paul Collier has demonstrated the converse of this proposition, namely, that state breakdown, civil war, and interstate conflict have very negative consequences for growth.20 A great deal of Africa’s poverty in the late twentieth century was related to the fact that states there were very weak and subject to constant breakdown and instability. Beyond the establishment of a state that can provide for basic order, greater administrative capacity is also strongly correlated with economic growth. This is particularly true at low absolute levels of per capita GDP (less than $1,000); while it remains important at higher levels of income, the impact may not be proportionate. There is also a large literature linking good governance to economic growth, though the definition of good governance is not well established and, depending on the author, sometimes includes all three components of political development.21 While the correlation between a strong, coherent state and economic growth is well established, the direction of causality is not always clear. The economist Jeffrey Sachs has maintained that good governance is endogenous: it is the product of economic growth rather than a cause of it.22 There is a good logic to this: government costs money. One of the reasons why there is so much corruption in poor countries is that they cannot afford to pay their civil servants adequate salaries to feed their families, so they are inclined to take bribes. Per capita spending on all government services, from armies and roads to schools and police on the street, was about $17,000 in the United States in 2008 but only $19 in Afghanistan.23 It is therefore not a surprise that the Afghan state is much weaker than the American one, or that large flows of aid money generate corruption.