State capacity has become an important concept in many social science subfields and comparative quantitative cross-national literature on the topic is proliferating especially in studies at the intersection of political and economic research. A large body of literature has analysed the role of state capacity for democratisation and democratic development, but an effective empirical testing of various theories on the topic requires better quantifications of state capacity. In fact, scholars have plenty of measurements to choose from, but most of them lack in validity and analytical ability. Poor measurements stand in the way of accumulating knowledge on state capacity.

This paper presents a novel cross-national measurement of state capacity and provides new empirical evidence on the relationship between state capacity and democracy. Hence, the paper contributes both to the so called “sequencing literature” and to the literature on measurement issues regarding state capacity. Through a comparison with other measurements, this study shows that the novel measurement is more valid than many established measurements of state capacity, providing more robustness to the following longitudinal analysis on the relationship between state capacity and democracy. The findings on the latter show that state capacity is an important and positive predictor of democracy, promoting the “state first argument”. The establishment of successful democracies can be enhanced by building up more capable state institutions.