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Title: The Cost of State Building: Evidence from Germany

Abstract: I examine the potential of pro-development state (capacity) building projects to be coopted for repression. I leverage the natural experiment created by the differential build-up of capacity between formerly Prussian and formerly non-Prussian parts of unified Germany, and the radical policy shifts instigated by the Nazi regime. Across a geographical discontinuity, and across different stops of the \textit{same} train transport to the East, I find that Prussian municipalities are significantly more efficient at deporting Germany's Jews. They are also better at providing public goods and at collecting taxes, facilitated by a legacy of better organization and information management. Just before the Nazis came to power, Prussian municipalities provide more public goods as well, but they are not differentially involved with anti-Semitism. I show that democratic oversight and aspects of bureaucratic culture can mitigate the potential for future abuse of state building projects. Ideologically fanatic principals and hierarchical local bureaucracies may exacerbate repression.