Bureaucracy and Growth

• Author: Agnes Cornell,Carl Henrik Knutsen,Jan Teorell
• Published date: 01 December 2020
• Date: 01 December 2020
• DOI: http://doi.org/10.1177/0010414020912262
• Subject Matter: Articles

https://doi.org/10.1177/0010414020912262

Comparative Political Studies

2020, Vol. 53(14) 2246 –2282

© The Author(s) 2020

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DOI: 10.1177/0010414020912262

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Article

Bureaucracy and Growth

Agnes Cornell1,

Carl Henrik Knutsen2,

and Jan Teorell3

Abstract

We revisit the hypothesis that a Weberian bureaucracy enhances economic

growth. Theoretically, we develop arguments for why such a bureaucracy

may enhance growth and discuss plausible counterarguments. Empirically, we

use new measures capturing various Weberian features in countries across

the world, with some time series extending back to 1789. The evidence

base from previous large-N studies is surprisingly thin, but our extensive

data enable us to move beyond the problematic cross-country correlations

used in previous studies. Hence, we conduct tests that control for country-

specific characteristics while ensuring sufficient variation on the slow-moving

bureaucracy variables to enable precise estimation. Our analysis suggests

that previous cross-country regressions have vastly overstated the strength

of the relationship. While this casts uncertainty on the proposition that

there is an effect of Weberian bureaucracy on growth, our further analysis

suggests that—if an effect exists—it may operate in the short term and be

stronger in recent decades.

Keywords

economic growth, Weberian bureaucracy, bureaucracies, politics of growth/

development

1University of Gothenburg, Sweden

2University of Oslo, Norway

3Lund University, Sweden

Corresponding Author:

Agnes Cornell, Department of Political Science, University of Gothenburg, Box 711,

Gothenburg 405 30, Sweden.

Email: agnes.cornell@pol.gu.se

912262CPSXXX10.1177/0010414020912262Comparative Political StudiesCornell et al.

research-article2020

Cornell et al. 2247

Weber (1978) outlined an ideal type of bureaucracy characterized by several

features, including that employees are recruited based on merit and make

decisions based on codified rules, in an impartial manner. While Weber pro-

posed that economic and technological developments are prerequisites for

bureaucratic development toward this ideal, subsequent research has focused

on how features of the bureaucracy affect economic development. In-depth

case studies suggest that a well-organized, knowledgeable, and rule-following

public administration fueled the economic development of several East and

South-East Asian countries from the 1950s and onward (Amsden, 1992;

Evans, 1995; C. A. Johnson, 1982; Kohli, 2004; Wade, 1990). Conversely,

bureaucracies displaying “neo-patrimonial” modes of governance instead of

Weberian features are proposed as a key reason for the underdevelopment of

many Sub-Saharan African countries (Goldsmith, 1999; Sandbrook, 1986).

In this article, we question, re-assess, and nuance the notion that a Weberian

bureaucracy enhances economic growth.

The notion that Weberian bureaucracy and growth are causally linked is

widely held among scholars, and several case studies have linked features of

the bureaucracy to the economic development of particular countries. Still,

the evidence base for a general effect from Weberian bureaucracy on growth

from large-N studies is surprisingly thin. The latter studies consist of cross-

section regressions on a handful of countries or panel regressions on short

time series employing proxy measures that do not capture the relevant theo-

retical concept. If we employ the standards of inference currently used for

other relationships involving observable macro-variables (e.g., democracy

and growth; see Acemoglu et al., 2019), we cannot yet claim to know with a

reasonable degree of certainty that Weberian features of the bureaucracy, in

general, enhance growth.

This situation, we surmise, results from the lack of data that directly tap

into Weberian bureaucracy with extensive time-series and geographical cov-

erage. We therefore employ several new measures from the Varieties of

Democracy (V-Dem; Coppedge et al., 2018a; Knutsen et al., 2019) project,

which capture various features of Weberian bureaucracy from 1789 to 2017,

globally.

These long time series allow us to include relevant information from the

early period of modern history—an era that saw the building of professional-

ized bureaucracies and the take-off of modern economic growth, especially

in Western Europe and North America (Maddison, 2001). They also allow us

to check for heterogeneity in the relationship across time; some studies indi-

cate that state institutions were less important for growth in this earlier period

(Chibber, 2006; Sylla & Toniolo, 1991). Finally, they enable us to control for

country-specific features that may bias the relationship, while ensuring

2248 Comparative Political Studies 53(14)

sufficient variation on the slow-moving bureaucracy variables to keep stan-

dard errors reasonably precise.

Our results suggest that previous estimates on Weberian bureaucracy and

growth from cross-country regressions have vastly overstated the relation-

ship. Our panel models typically report positive, but modest, point estimates,

which are mostly statistically insignificant at conventional levels. We con-

duct a battery of robustness tests and, for example, vary measures, estimators,

and length of the panel unit; the lack of a clear relationship does not result

from a particular specification choice. Yet, further analysis suggests that—if

it exists—the effect tends to operate in the short term and is stronger in recent

decades. The latter finding could, for instance, stem from bureaucracies

becoming more important for growth as production technologies have

become more complex, but it could also, in part, reflect that it is inevitably

harder to measure Weberian features precisely in early years.

Theory

The Weberian ideal type of bureaucracy entails hierarchical organization

with clearly delineated lines of authority and areas of responsibility, that

decisions are based on clearly codified rules and made in an impartial man-

ner, and that bureaucrats are meritocratically recruited, have expert training,

and advance in the organization based on objective criteria (Weber, 1978).

Hence, Weberian bureaucracy is a description of how state administrations

are organized and should be distinguished from outcome-centered concepts

such as “state capacity” or “quality of government”. Whether having a

Weberian bureaucratic organization promotes “good outcomes,” including

good governance, are ultimately empirical questions (Dahlström & Lapuente,

2017).

So why would one expect Weberian characteristics to matter for economic

growth? In this section, we elaborate on potential links but subsequently

highlight important objections and qualifications pertaining to these pro-

posed links.

Why Weberian Bureaucracies May Enhance Growth

The key proximate causes of per capita (p.c.) economic growth, as recog-

nized by growth economists, are physical capital accumulation, human capi-

tal accumulation, and technological development (Acemoglu, 2009). Thus, a

country’s public administration should matter for growth insofar as it incen-

tivizes actors to invest in or otherwise enhance one of these “immediate

determinants” of growth.