State or Regime? The Impact of Institutions on Welfare Outcomes

A substantial literature connects democracy with superior welfare outcomes. A recent wave of publications takes issue with this finding, positing that globalization, authoritarian legacies and sample bias undermine the posited relationship and the statistical findings that support this thesis. We introduce a new dimension into this debate, state capacity. Using a disaggregated Weberian approach to the state, which focuses on its ability to maintain order and to effect human development through bureaucratic means, we explore the relationship of state capacity with three critical welfare outcomes, infant mortality, education, and basic nutrition. We establish the importance of these two elements of state capacity for these specific welfare outcomes through a time-series cross-sectional analysis of developing nations covering the period of the 1980s to the 2000s. We also do not find strong evidence that democracy affects either infant mortality or basic nutrition in models that incorporate state capacity. There is evidence that democracy does positively effect education outcomes.