Containment or bad detection? Poor state capacity implications on reported Covid-19 cases

This paper examines the effects of state capacity on the reported Covid-19 infection (and mortality) rate and its policy implications. We analyse two dimensions of state capacity which were critical during the pandemic. The healthcare capacity acted to contain the virus outbreak (an effect we call containment). The information capacity acted to detect contagious yet asymptomatic cases (an effect we call detection). We argue that containment pushes down the reported infection rate. In contrast, detection pushes it up, thus generating a non-linear combined effect that we estimate systematically using Colombian municipality-level as well as country-level data, different data sources, and various empirical strategies. Our findings indicate that the infection (and mortality) rates were likely under-reported, especially in areas with a low state capacity level, due to their poor capabilities to detect the virus. Our study put the emphasis on the many facets of state capacity, each affecting in complex ways our understanding of important phenomena, such as the Covid-19 outbreak.