We propose a theory by which geographic attributes explain cross-regional institutional di§erences in: (1) the scale of the state, (2) the distribution of power within state hierarchy, and (3) property rights over land. The mechanism that underlies our theory concerns the stateís extractive capacity. In particular, we argue that the ability to appropriate revenue from the farming sector is a§ected by the transparency of farming which, in turn, is a§ected by geography and technology. We apply the theory to explain the di§erences between the institutions of Ancient Egypt, Southern Mesopotamia and Northern Mesopotamia.