ABSTRACT
This chapter examines what the political system actually does. Therefore, the question can be posed as follows: Is the government able to provide an environment that is conducive to economic growth? Approached in this way, variations in economic growth can be traced to the capacity of the political system. The chapter shows work in the fields of political development, political demography, and international relations. It describes an explicit break with the prevalent convention in the political development field that economic and political progress goes hand in hand. The interactive relationship between political development, economic development, and economic growth is nonlinear. The more the government attempts to establish additional economic rights and responsibilities, implement redistributive policies, and manipulate the economy for political purposes, the greater the cost relative to the payoff. In order to include political capacity in a model reflecting the process of economic growth, it is essential to understand what it means to say that a government is capable.
