Bureaucracy and Growth

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.