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Chapter 2 discusses local politics at the municipal government level. It focuses on land battles in the urban core between high‐ranking state units (or “socialist land masters”) and municipal governments. It argues that while the socialist land masters occupy premium land parcels inherited from the planned economy, the municipal government's authority is reinforced by a modernist discourse, Western urban planning doctrines, and recent policies that grant authority over state‐owned urban land to the territorial government. Rather than settling the matter of power in the city, however, municipal leaders' granted authority is tested and defined by their political, regulatory, organizational, and moral authority in negotiations with those above, within, and below them. The municipal government's regulatory capacity is especially challenged by a fragmented real estate industry that includes players from state, non‐state, and hybrid sectors.

This introductory chapter begins by setting out the context and scope of the book. It presents two theoretical approaches for modelling the relationship between increasing globalization and its effect on state capacity. It discusses the reasons behind the book's focus on the banking sector. An overview of the subsequent chapters is presented.

This final chapter locates the core findings of this book within a number of broader themes and agendas. In particular, it argues for scholarly interest in the politics of delegation to be matched by what is termed the politicization of delegation. By this, the chapter means that the logic of delegation itself, rather than its consequences, needs to be the focus of critical political analysis in order to push the process back within the sphere of public contestation.

The basic idea is that activities that use state power should be within the state organization; the state should mainly finance social, cultural, and scientific activities involving externalities and dealing with basic human rights, and public non-state service organization should execute them. Additionally, public management reform is concerned with the democratic character of government officials’ decisions. Thus, while it emphasizes more autonomy for government officials in their decisions, given the complexity of the problems that government faces today and the speed required for some decisions, it demands, as a trade-off, greater transparency and accountability in the decision-making process. Finally, public management reform’s objective is not just to make the state organization more efficient but to build state capacity.

Chapter 5 and the corresponding Ch. 10 in Part Three of the book provide background accounts of political development in the USA from the American War of Independence to the Philadelphia Convention, and establish that, by 1787, Congress was marked by military weakness and financial insolvency. Here, the background is given to the conflict between the Federalists and the Antifederalists over the military clauses of the US Constitution, a conflict that is analyzed in Chs 6–8 (the debate over the fiscal clauses is analyzed in Part Three of the book). It is argued that two principles frustrated the ability of the Confederation Congress to provide the union with the military capacity it needed to function: first, the sovereignty of the states; and, second, the strong aversion in the American political tradition to a peacetime standing army. In the end, these principles led Congress to become passive in foreign affairs. Ends with an attempt to locate the Federalist demand for an improved military capacity of the national state not in the context of militarism, but in the context of the promotion of commerce.

State structures have been radically reformulated in recent decades. In both developed and developing countries a neo-liberal informed model or narrative of ‘good governance’ has seen many functions and responsibilities hived-off or delegated beyond the direct control of politicians and public officials. However, the state has not been ‘withered away’ or ‘rolled back’ — it has been transformed. This chapter examines how this transformation has been based upon the notion of delegation and why this matters, in both administrative and democratic terms.

This chapter summarizes the lessons from Chapter 4 in the form of a function that describes endogenous political turnover. This preliminary allows us to study equilibrium investments in fiscal and legal capacity in the comprehensive core model. Section 5.2 develops the model by adding private capital formation along the same lines as in Section 3.2.3, but in a setting where the risk of civil war affects the expected return to private investment. Section 5.3 discusses the empirical implications of our comprehensive framework and how it can be used to interpret observed patterns in the data. Section 5.4 puts the typologies of investment states and violence states together into an Anna Karenina principle of development, an allusion to the Tolstoy quote at the beginning of the chapter. It also briefly revisits the possibility of a predatory state and observes how this enriches our understanding of nonprosperity.

This chapter attempts to integrate two different strands of research on political violence, developing a theoretical model to analyze the common roots of repression and civil war. Under specific assumptions about the conflict technology, it shows that peace, repression (one-sided violence), and civil war (two-sided violence) become ordered states depending on a common underlying latent variable, which is shifted by shocks to the value of public goods, wages, aid, and resource rents. But these effects only emerge when political institutions do not provide sufficient checks and balances on the ruling group or adequate protection for those excluded from power. The chapter also shows how to start bridging the gap between theoretical modeling and econometric testing. Under specific assumptions on what can be observed, the predictions from the model can be taken to the data by estimating either an ordered logit or the conditional probability of transition from peace to violence or from non-civil war to civil war. The empirical strategy here is much sharper than in earlier chapters and shows that the kind of theory we are building can help us approach the data in a specific way.

This chapter discusses the issue of taxation and redistribution in economies dominated by elites with limited state capacity. Within a simple aggregate framework, we discuss the political economy incentives of elites to tax, redistribute, and increase state capacity. In particular, the analysis highlights the role of complementarities or substitutability in the production process between the factors controlled by the elite and other social groups, and shows the existence of natural increasing returns for elites to increase state capacity. The chapter also discusses how the incentives for state capacity building are affected by political threats of power shifting

This chapter argues that any incorporation of the CEE economies into the VoC framework must take into account two fundamental features of these economic systems: an almost complete lack of working-class political mobilization and a completely outdated technological structure. As a result, there is great reliance on foreign investors and foreign purchasers for providing technology transfer and the training of manpower. The chapter conceptualizes this VoC as ‘liberal dependent post-communist capitalism’ to highlight the liberal nature of the state and the dependent nature of the economy. In most the rest of the post-communist world, foreign direct investment, or FDI, and foreign manufacturers play a much smaller role. Instead, patron-client relationships ensnare major enterprises, leading to a decomposition of the bureaucratic (in the Weberian sense of the term) nature of the state. This produces a different variety of post-communist capitalism.

This concluding chapter restates and further examines the findings of the book in detail. The first section explores the impact of democratic regime-building operations across the three cases, paying particular attention to the mechanisms of influence and the influence on the mode of transition. The second section identifies a range of challenges to democratic regime-building, including the inherent limitations of international democracy promotion in these settings and the role of domestic state weakness and political divisions. Subsequent sections then examine a set of further issues, including the implications of the findings for theory and for policy, and the scope of the book's findings.

This book examines the democratization of authoritarian enclaves in America's Deep South during the period 1944–1972. Through a comparative historical analysis of the experiences of Georgia, Mississippi, and South Carolina, it shows how the cohesion of elites and party–state capacity contributed to differences in modes of democratization across the Deep South. It suggests that the advancement of Republicans was in part a consequence and a cause of these democratization processes. This introductory chapter discusses some of the alternative perspectives on postwar southern political culture, along with the role of the political economy and black insurgency in southern political development. It also describes the phenomenon of authoritarian enclaves and offers some intuitions about how they might be democratized, focusing on subnational authoritarianism and subnational democratization. Finally, it provides an overview of the book's research design and summarizes the findings to come.

To what extent South Korea adopted neoliberal reforms and thus conformed to the pressures of globalization is explored in this chapter. After the Asian financial crisis of 1997, South Korea was compelled to adopt IMF-style liberalization policies and, by implication, to abandon economic nationalism. However, this chapter argues otherwise. The evolution of Korea’s economic trajectory since World War II shows that no real shift has taken place in Korea’s economic nationalist trajectory despite the adoption of Segyehwa (iglobalization policies) in the early 1990s incorporated under outward foreign direct investments by Korean business followed by inward foreign investment. Despite deep international economic integration, the capacity of the Korean state has not diminished nor has the traditional nationalist development trajectory reversed. The Korean state remains developmental, neo-mercantilist, and economically nationalist.

This concluding chapter summarizes the book’s main arguments regarding developmental foreign aid in the pharmaceutical field and suggests that similar conclusions apply to other industrial sectors, as well as to other (nonindustrial) sectors of interest to foreign aid, including the provision of services and the distribution of essential commodities. It also identifies a number of contradictions and tensions inherent to developmental foreign aid, including in regard to its effects on the state. First, given that the cases examined in the book confirm the importance of state capacity for foreign aid effectiveness, the chapter takes on the highly contested question of whether foreign aid could contribute to state capacity-building. Second, given the difficulties in increasing state capacity, maybe aid programs could simply bypass the state? The chapter then explains why even developmental foreign aid should not—but also cannot—replace the state. The type of foreign aid that is likely to be effective is not parachuting aid that evades local institutions and actors but, rather, foreign aid that relies on the institutions and actors in place. Finally, the chapter considers the recent wave of foreign direct investment (FDI) in the pharmaceutical sector in East Africa.

This chapter examines the difficulties in defining ‘excessive’ external imbalance and external debt. It begins by addressing the issue of ‘original sin’, focusing on Austro-Hungary, Greece, and Spain, and the implications of excessive imbalances and debt for state power. It sets these issues in the contexts of the distinctive characteristics of creditor-debtor state relations. The chapter shows how states are stress-tested using a series of indicators: current accounts, unit labour costs, inflation-rate differentials, domestic savings rates, and net household wealth in the case of external imbalances; gross external debt/GDP ratio, external debt service payments and exports, and foreign-exchange reserves in the case of external debt. The chapter analyses the buffers that states can erect against these types of crisis: export-led growth, size and liquidity of domestic bond market, and foreign-exchange reserves. It concludes by considering external risk management as an imprecise science, stressing the overall importance of private sector and state capacity.

This final chapter is devoted to considering the question posed at the outset: ‘To what extent do theories of governance encapsulate and account for the contemporary topography of the state?’ In doing so, the chapter posits a more refined understanding of state capacity that encapsulates both institutional and socio-political forms of control, leverage, and influence: a third wave of governance. The central focus of this third wave is ‘the paradox of state capacity’, which identifies and explores a simultaneous process through which states have sought to develop and foster new forms of central capacity whilst at the very same time transferring key control levers to a range of semi-independent organizational forms. Viewed from this perspective, the ‘paradox of state capacity’ develops the analytical leverage of existing scholarship, whilst illuminating the linkage between governance-related debates and broader socio-political concerns, including rising public expectations and the emergence of new policy challenges.

This introductory chapter assesses state capacity in India. There is little question, as many boosters of India's rise have argued, that the Indian state has exhibited considerable ability to tackle diverse challenges since its emergence from the collapse of the British Indian Empire. It has, for the most part, successfully fended off external challenges to its territorial integrity; it has worn down a series of secessionist insurgencies and has managed to cope with the many fissiparous tendencies of ethnic, class, and religious cleavages that some analysts thought would tear the country apart in the 1960s. However, state capacity remains paradoxical in India. India does not possess a weak state, but neither does it have a strong state. Its state capacity falls in between the conventional weak-strong continuum. As a consequence, the Indian state manifests both strengths and weakness, sometimes simultaneously, sometimes intermittently.