State power and economic development

I don’t generally trust such methods, but the results are unacceptable to me:

I provide new empirical estimates of the effect of state power on economic development across countries over the period 1960–2022. Specifically, I construct a comprehensive state index based on six different dimensions of effective state institutions derived from the Variants of Democracy (V-Dem) dataset. Then, I estimate various parameter models under a common factor framework. My intellectual strategy clearly allows the growth effect of state power to vary across countries and account for common factors that are neglected. My preferred estimates show that a standard deviation increase in my V-Dem-based status index predicts an increase in per capita income of about 6%-7%. The magnitude of such an effect is less than half of that implied by conventional estimates obtained under the restrictive assumptions of slope homogeneity and cross-sectional independence. In addition, I provide anecdotal evidence suggesting that global variation in the economic importance of state capacity is rooted in pre-determined demographic differences, national history, long-term relationships between countries, and interpersonal trust.

That’s from a new paper by Trung V. Vu, by lead author Kevin Lewis. I’m not sure that such results indicate anything more than “many good things converge on a large scale.”