The democracy measure (demo) comes from Boix, Miller, and Rosato (2013). The state capacity measure (Capacity) comes from Hanson and Sigman (2013.)
Reference: Erik H. Wang and Yiqing Xu (2018). "Awakening Leviathan: the Effect of Democracy on State Capacity, 1960-2009." Research and Politics, forthcoming. Available at: http://ssrn.com/abstract_id=2626849.