Abundant qualitative evidence revealshow public and private actors abuse regulations to seekrents, impede reforms, and distort the economy. However,empirical evidence of such behavior, including its economiccosts, remains limited. For that reason, the objective ofthis paper is to help practitioners who seek toquantitatively analyze state capture make better use ofexperience, methodologies, and potential data sources. Basedon a comprehensive body of existing empirical studies, itprovides guidance to analyze state capture and its impact onthe economy. Chapter one discusses the concept of statecapture and its relevance for economic development. Chaptertwo presents the main avenues of how policies have beencaptured and the empirical evidence of their implications.Chapter three provides an analytical framework for statecapture analysis and discusses various applied approaches.The chapter is organized into three components required forthe assessment: (i) evidence of political connectedness,which discusses data collection methods and methodologies ofanalyzing political connections; (ii) evidence of de jureand de facto mechanisms, through which firms receive policyfavors; and (iii) firm-level indicators to measureperformance differences between politically connected andnonconnected firms. Finally, two annexes provide a list ofpotential data sources and an extensive compilation ofstudies that have empirically examined state capture.
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