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Bureaucracy and Growth: A Long-Run Panel Analysis (with Agnes Cornell and Carl Henrik Knutsen)

In this study, we revisit the hypothesis that “Weberian” bureaucracy enhances economic growth. While the arguments underpinning this hypothesis are plausible, our review of the literature suggests that a) these arguments require further specification on exactly which features of Weberian bureaucracy are linked to growth (and how), and b) the evidence base from systematic large-n studies for this claim is surprisingly thin. Theoretically, we elaborate on and nuance arguments tying distinct features of the bureaucracy to growth. Empirically, we present and use new cross-country data capturing various features of Weberian bureaucracy, with time series extending all the way back to 1789. These data also allow us to conduct stringent tests that control for country-specific characteristics that may bias the relationship while ensuring sufficient variation on the slow-moving bureaucracy variables to enable precise estimation. Our empirical analysis suggests that previous estimates on the relationship between Weberian features of the bureaucracy and growth drawn from cross-country regressions have vastly overstated the strength of the relationship. While this casts some uncertainty on the proposition that there is, indeed, an effect of features of the bureaucracy on growth, our further analysis on our measure of impartial and rule-following administrations suggest that – if it exists – it tends to operate in the short-term and it is apparent only in recent decades.