Authors : Christophe Muller and Marina Dodlova.

Abstract : Poor countries remain poor. This paper explores one reason of such a vicious cycle
as state capacity. The previous literature presents many theories on state building and
development policy. However, little rigorous empirical analysis has been conducted. We
put forward our understanding of state fragility through a comprehensive empirical study
of state capacity and pro-poor policies. Employing an IV strategy based on the daylight
hours, we nd that indeed the scale and scope of social policy largely depend on the level
of state capacity. Specically, state capacity is necessary to enact non-contributory social
transfer programs and increase spending on educational and welfare policies.