Some research indicates that the fist steps toward democratization of an authoritarian regime actually lowers state capacity. How strong is the evidence for this hypothesis?
I'm not sure about the recent state of the literature regarding empirical evidence on this topic, but a consideration that may be of interest and may help in locating relevant literature is that it has been theorized that whether the authoritarian regime is helping or hindering the process would have an impact. This article describes different interpretations:
Honig, B. (1991). Declarations of Independence: Arendt and Derrida on the Problem of Founding a Republic. The American Political Science Review, 85(1), 97–113. https://doi.org/10.2307/1962880
If the regime supports the transition to a democracy, it seems intuitive that state capacity would be better off than if the regime fought the people until the bitter end, because for instance there would likely be more infrastructure damage from the conflict. To test this when searching for empirical cases, it may be helpful to contrast cases where there was a peaceful transition versus a war for independence.
In my dissertation research, I examine the equivalent of a revolution in a student government context at the postsecondary level in Canada over allegations of corruption and mismanagement. While there wasn't a war in this case, the university ended up stepping in and organizing a referendum in which students voted to replace their old student government with a new one, so it can be said that the regime in power in the old student government was not rooting for the side of the movement for change. From my interviews with former students, it seems that after the revolution, there were challenges returning the equivalent of state capacity to a level of normalcy. While it is my understanding that there are still some enduring challenges five years after the referendum in 2019, such as for instance the university administration taking control over some areas that were once the student government's jurisdiction like the administration of a subsidized transit pass, and COVID-19 did not help either, the new student government overall seems to have been able to restore its capacities and in some cases has been able to innovate and improve service quality beyond that of the old student government. This leads me to suggest that substantial transitions of any kind are likely going to require a period of adjustment to get things situated, which may result in a temporary decline in state capacity. For transitions to democracy, it is my hope that in the long run it would be well worth it.
In my opinion, research shows that the first steps toward democratizing an authoritarian regime can weaken the state's capacity. This process often increases unrest, corruption, self-interest, and national division.
Firstly, democratization often brings political and social instability, weakening the government's effectiveness. As power structures shift, internal conflicts and inefficiencies can arise. New power vacuums may also lead to corruption and clientelism, as seen in post-Soviet states and the Arab Spring.
Economic uncertainty during democratization can further reduce the state's ability to provide essential services and maintain stability. Lastly, political freedom can cause national divisions, with different factions and regional movements threatening national unity and coherent policymaking.
In conclusion, while democratization has long-term benefits, the initial phases often come with significant challenges that can reduce the state's capacity.
The problem in answering this question we need to ask what is the degree of political and social development the given nation has. That if you have no real formation of civil society--which is when all remember of that nation see each other as fellow sharers of a common bond or seeing them more as strangers they accidentally live nearby--or not. In that case, the authoritarian body is the only thing holding things together. Democracy can only work where there exists a healthy civil body where the members see themselves as being part of one community sharing a common good which they all believe they are benefiting from and would be far worse off if they did not share.
We tend to forget that Western European states only developed viable democratic political systems after several hundred years of autocratic/monarchial rule that produced a viable civic and national common good that became the basis for the civil society that all members of those nations see as a shared common benefit.