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There is a strong covariation between income level and two other important aspects of society: state capacity and the use of violence. Why do such clusters emerge?
There are different possibilities: (i) the income level is both a reason for and the effect of violence and state capacity, (ii) violence and state capacity are mutually related and (iii) the covariation reflects common driving forces. Distinguishing a specific one-way causal relationship might thus only provide part of the picture. A more complete explanation for the observed clusters with high and low levels of development requires an approach that ties the three dimensions together. One such approach is discussed here.
IT IS IMPORTANT TO UNDERSTAND THE COMMON DRIVING FORCES, such as current economic, political and social circumstances, for different development outcomes, as well as the existence of two-way feedbacks between different outcomes, such as between income and violence, between income and state capacity and between different forms of state capacity.
THREE KINDS OF STATES – general interest states, special interest states and weak states – can be distinguished, even if no real state is a perfect fit. These kinds of states can be combined with different states of violence – peace, oppression and civil war – and with such factors as the degree of general interest, the cohesiveness of institutions, the dependence on natural resources and aid dependence and the strength of the political opposition in order to categorize different kinds of development clusters.
FOREIGN DEVELOPMENT AID is an area where this analysis can be applied. The approach indicates the importance of taking different kinds of development clusters into consideration. Otherwise, the returns to foreign development aid might be low. Different kinds of foreign development aid might have different effects in the same development cluster, while the same type of foreign development aid can have different effects in different aid clusters.
AUTHORS Tim Besley is Professor of Economics and Political Science at London School of Economics. E-mail: t.besley@lse.ac.uk.
Torsten Persson is Professor of Economics at the Institute for International Economic Studies at Stockholm University. E-mail: torsten.persson@iies.su.se.