Beyond Democracy: Does State Capacity Matter More for Development in Africa?

ABSTRACT Persistent disparities in development outcomes across Africa despite decades of democratic reforms raise important questions about the institutional foundations of sustainable development. Unlike previous studies that examine democracy and state capacity separately, this study directly compares their relative explanatory power within a unified empirical framework using the Sustainable Development Goal Index (SDGI) as a multidimensional measure of development performance. Using data for 43 African countries from 2000 to 2023, the analysis employs fixed‐effects estimation with Driscoll–Kraay standard errors, correlated random effects (CRE/Mundlak) and dynamic system GMM estimators. Democracy is measured through electoral, liberal, participatory, deliberative and egalitarian dimensions, while state capacity is captured using a composite index constructed from government effectiveness, regulatory quality, rule of law, bureaucratic quality and fiscal capacity. The results show that democracy is positively associated with sustainable development, but state capacity exhibits a stronger and more consistent association and explains a substantially larger share of development variation. State capacity also strengthens the development benefits of democracy, highlighting the importance of capable institutions for achieving sustainable development in Africa.