State capacity and national leadership are central to governance, economic development, and stability. However, little research systematically investigates what drives changes in state capacity and evaluates leadership performance. This article examines the impact of leadership changes and shifts in the source of leader support on state capacity. Utilizing data from 1045 leaders across 159 countries from 1960 to 2015, and a subset of 60 leaders who died in office unexpectedly, the study employs fixed effects models and Difference-in-Differences (DiD) analyses. Findings reveal that leadership changes and shifts in support significantly impact state capacity, moderated by institutional constraints and veto players. This study underscores the importance of leadership and institutional dynamics in shaping governance and policymaking, providing empirical evidence on the conditions under which leadership matters. The results highlight how both leadership transitions and institutional settings shape state capacity, with political institutions constraining leaders, reducing volatility, and preventing extreme fluctuations.
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