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In comparative politics, scholars have demonstrated that both democracies and autocracies have incentives to develop state capacity. We argue that democracy itself is not a cause for states to develop capacity. Our argument instead focuses on the role of political competition. Leaders facing competitive elections will choose to develop state capacity in order to win office. For instance, politicians in competitive environments must be able to identify problems with public service delivery that lead to voter discontent. These politicians must also reach out and touch their voters with active and effective policy to be successful. We examine state capacity among the American states, all of which are at least minimally democratic. We employ multiple metrics of electoral competition and a new 20-year dataset of state-level state capacity to study this relationship at the subnational level from 2000-2019.