State Capacity and Fiscal Policy Dynamics
Summary
State capacity encompasses the institutional and administrative competencies that enable governments to extract revenues, enforce laws and deliver public goods. Fiscal policy dynamics examines how these competencies evolve over time, shaping the design and implementation of taxation, expenditure and debt management. Recent work underscores that state capacity is not a static endowment but an outcome of political bargaining, institutional reform and economic pressures. Variations in coercive, extractive and legal capacities explain why some governments mobilise resources efficiently while others struggle with revenue shortfalls and service delivery gaps. Feedback loops between capacity and fiscal instruments mean that improvements in budgeting systems or tax administration can catalyse further institutional strengthening. Understanding this interplay is vital for designing policies that support sustainable development, crisis resilience and equitable growth.
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State Capacity and Fiscal Policy Dynamics publication trend
The graph below shows the total number of articles in state capacity and fiscal policy dynamics across all publications each year (not limited to Nature Index journals).
Technical terms
State capacity: The ability of a government to formulate and enforce rules, provide public goods and collect revenues effectively.
Fiscal policy dynamics: The evolving processes by which governments mobilise revenue, allocate spending and adjust tax or borrowing strategies over time.
Extractive capacity: The mechanisms and authority through which a state secures resources—chiefly via taxation and fees—from its population.
Principal–agent dilemma: A situation in which government principals cannot fully observe or control the actions of their agents (e.g. bureaucrats), leading to potential inefficiencies or rent-seeking.
Public financial management: The framework of institutions, procedures and regulations governing public budgeting, expenditure control and financial accountability.
References
- Endogenous State Capacity. Annual Review of Political Science (2024).
- The uneven reach of the state: A novel approach to mapping local state presence. Journal of Development Economics (2025).
- What determines administrative capacity in developing countries?. International Tax and Public Finance (2019).
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