Changing roles of the state: measurement, opportunities, and problems

Although state enterprises have been privatised worldwide over the past two decades, strong states remain necessary for many purposes. Privatisation makes government regulation more important, and governments remain crucial in stimulating economic development and social transformation. While policy models can not be transferred cavalierly from one nation and one culture to another, leaders can sometimes adapt policies that clearly work elsewhere to the needs and the characteristics of their nations. While the market has come more directly to shape economic decisions, both nationally and internationally, the policies of national governments still shape the institutional and legal frameworks within which the market operates. Ironically, although states have lost some power around the world, citizens have come to make more and more demands on them. Since purely market mechanisms of allocation tend to exacerbate differences in wealth and power, it is especially important for governments to find ways to maximise social and political equality in the years ahead. This is true for the higher-income countries in an era when they are curbing the old provisions of the welfare state, just as it is for the least affluent nations, where building state capacity remains a central task.