This paper investigates to what extent and under what conditions democracy and state capacity affect human development. We argue that democratic institutions provide leaders with incentives for improving human development, whereas capable state apparatuses enable them to do so. Accordingly, we argue that the two factors reinforce the effects of each other and that the highest levels of human development are achieved when high levels of both factors are present. Our argument contradicts earlier studies, which have claimed that the effects of the two factors crowd out one another. We investigate the proposition through time-series cross-sectional analyses, employing new and improved measures of both democracy and state capacity. These new measures not only give our analysis an advantage in terms of measurement validity; they also substantially increase its temporal scope compared to previous studies. Consequently, we analyze a global sample of countries spanning the period 1902–2008. The results provide strong support for our theoretical expectations, and they are robust to both alternative measures and different model specifications. Our results highlight the importance of building capable state structures and democracy in conjunction and have significant implications for scholars and practitioners of development policy.