Bureaucracy and Growth

We revisit the hypothesis that “Weberian” bureaucracy enhances economic growth. While the arguments underpinning this hypothesis are plausible, our review of previous research suggests that the evidence base from systematic large-n studies is surprisingly thin. Theoretically we develop arguments for why “Weberian” bureaucracy may be important and under which circumstances it is more likely to matter, but we also discuss plausible and under-appreciated counterarguments. Empirically, we present and use new cross-country data capturing various features of Weberian bureaucracy, with time series extending back to 1789. These data allow us to move away from the problematic cross-country correlations used in previous studies and conduct more stringent 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 estimates drawn from cross-country regressions have vastly overstated the strength of the relationship. While this lack of robustness casts uncertainty on the proposition that there is, indeed, an effect of Weberian features of the 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.