This paper begins with the presumption that rapid economic development requires an effective state. An effective state is able to act independently of powerful interest groups with the aim of allocating resources so as to maximize long-term economic growth. It will be argued that such states are more likely to arise in situations within which the state must earn its income. That is, it must construct an institutional apparatus to extract the revenue that it needs and it is dependent upon the bulk of its agricultural producers to produce this revenue. The higher agricultural productivity within a region, the more dependent the state will be on revenues from the bulk of its agricultural producers. This dependency will lead, through a dialectical process, to a state whose activities will be constrained, a state which will be able to effectively commit itself to long-run development. This proposition is tested using time series/cross-sectional data for a sample of diverse countries from the 1960’s through 1990’s.