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Key Text The Missing Dimension of Stateness

Author: F Fukuyama
Date: 2004
Size: 58 pages (2 MB)

Summary

Politics in the twentieth century have been heavily shaped by controversies over the approximate size and strength of the state. This book chapter from John Hopkins University analyses the role of the state in development, in particular, how the terms ‘scope’ and strength’ can advance our understanding of state effectiveness. It argues that there are grave limitations to the ability of external powers to create demand for institutions and therefore to transfer existing knowledge about institutional construction and reform to developing countries. Crucially, policymakers should avoid initiating programs that undermine state capacity in the name of building it.

To understand degrees of stateness around the world it is important to differentiate between ‘strength’ (ability to plan, execute, enforce) and ‘scope’ (functions and goals). A key confusion in our understanding is that the word ‘strength’ has been used to refer to what is actually ‘scope’. The strength and scope of states can be roughly charted in a matrix, and where states appear on this matrix has very different consequences for economic growth. States with limited scope and high institutional quality are optimal from an economist’s standpoint, and the worst economic performance comes from states with ambitious scope but limited capacity.

The economic crises of the 1990s led to a new recognition of the importance of strength over scope.

While it is now conventional wisdom to say that institutions are the critical variable in development, the field of institutional development has become chaotic.
Of the four components of institutional capacity on the supply side (organisational design and management; institutional design; basis of legitimisation; and social and cultural factors), the bulk of transferable knowledge lies in the first area.
Insufficient domestic demand for institutions or institutional reform is the single most important obstacle to institutional development in poor countries.
When domestic demand emerges it is usually the product of a crisis or extraordinary circumstances that create no more than a brief window for reform.
In the absence of strong domestic demand, demand for institutions must be generated externally, whether through conditionality or the direct exercise of political power by outside authorities (nation-building).
However, the track record of both methods is discouraging.

There are grave limitations to the ability of external powers to create demand for institutions and therefore on their ability to transfer existing knowledge about institutional construction and reform to developing countries.

International financial institutions, donors and non-governmental organisations should be cautious about raising expectations for the long-term effectiveness of the new capacity-building mantra.
International actors are not simply limited in the amount of capacity they can build; they are actually complicit in the destruction of institutional capacity in many developing countries.
This problem cannot be fixed unless donors make a clear choice that capacity-building is their primary objective, rather than providing the services themselves. The incentives for maximum returns facing the majority of donors will usually not permit this to happen.
Although the scope of governments in the developing world is often still too large, the most urgent need is to increase the strength of state institutions to supply those core functions that only governments can provide.
For countries where there is some prospect of (at least partial) success, the focus needs to be on those dimensions of stateness that can be manipulated and built: public administration and institutional design.
There should also be an emphasis on mechanisms for transferring knowledge in these areas to countries with weak institutions.

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Source: Fukuyama, F., 2005, 'The Missing Dimension of Stateness', in 'State Building. Governance and World Order in the Twenty-First Century', Profile Books, London, pp. 1-57