ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book explores how the political capacity of governments affects economic and political performance. It shows that a politically capable government that is an active economic participant can positively intervene to shape an environment. The book highlights the idea that capable governments pursue the long-term growth of the state. It demonstrates that efficient states minimize the fiscal deficit, even if this means less short-term monetary flexibility, and that efficient governments are able to control inflation by reducing the fiscal deficit. The book argues that highly capable governments do not make use of seigniorage to gather resources, but instead use tax revenues that are less regressive. It argues that lower political capacity indicates less ability to extract resources, implying higher budget deficits and an increase in uncertainty.
