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The fundamental Coase of development: property rights foundations of the effective state

Published online by Cambridge University Press:  17 June 2020

Ennio E. Piano*
Middle Tennessee State University, Murfreesboro, TN, USA
Alexander W. Salter
Texas Tech University, Lubbock, TX, USA
*Corresponding author. Email: Ennio.Piano@MTSU.Edu


This paper identifies political property rights and jurisdictional rivalry as two important mechanisms that drive political and economic development. After developing a general framework to explain relative performance in the ‘market for governance’, we argue that Western Europe during the High Middle Ages presented initial conditions conducive to the development of effective states. We extend the framework by analyzing city-state governance in Renaissance Italy, as well as public finance practices in early modern Germany. We conclude by discussing the implications of our argument for the literature on state capacity and economic development. The takeaway is that well-aligned political property rights and competition in the provision of governance services can promote the protective and productive state while forestalling the predatory state.

Research Article
Copyright © Millennium Economics Ltd 2020

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