What Drives the Historical Formation and Persistent Development of Territorial States?

The importance of the length of state history for understanding variations in income levels, growth rates, quality of institutions and income distribution across countries has received a lot of attention in the recent literature on long-run comparative development. The literature, however, is silent about its deep historical origins. Against this backdrop, this paper makes the first attempt to explore the determinants of statehood by considering the potential roles of an early transition to fully-fledged agricultural production, the adoption of state-of-the-art military innovations, and the opportunity for economic interaction with the regional economic leader. The results demonstrate that only the association between economic interaction and the rise and development of the state is statistically robust.