State capacity and inclusive development: new challenges and directions

States shape development. This paper takes stock of recent advancements in the literature on state capacity and connects them to the study of inclusive development.

The paper argued that state capacity is best approached as a multi-dimensional concept that can be disaggregated into three interrelated dimensions: the external embeddedness with non-state actors, the organisational competence of state agencies and their territorial reach. Consequently, the document argues that the established focus on geography, external pressures and capitalist development needs to be complemented with close attention to elite politics, ruling coalitions and domestic conflict when identifying key determinants of state capacity.

On the other hand, the author highlights that the capacity of states to promote inclusive development is shaped by historical patterns of state formation itself, in particular the institutional and political legacies left behind by European overseas colonialism. Yet, contemporary state transformations linked to neoliberal globalisation, democratisation and power shifts in the international order have major implications for the capacities of states to promote inclusive development.

In the final analysis, the paper recommends scholars to work backwards from “success cases” and identify specific configurations of the three components of state capacity underpinning the ability to promote inclusive development in order to unpack the interactions among them.

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State capacity and inclusive development: new challenges and directions