This paper discusses varieties of state and their salience for prosperity by challenging the notions of decline of nation-states and demise of national diversity in international political economy. Despite the fact that increased international trade and capital movement raises the proportion of each economy exposed to world market pressures, domestic institutions have considerable resilience in the face of global constraints. State capacity and strength generally refers to an ability based on highly centralized authority to protect policy formulation and implementation apparatus from capture by particular private interests. Autonomous states do not damage public goods avoiding policy distortions which reduce total national welfare. However, this study contends that accountable engagement of state is also a crucial component of state capacity in addition to autonomous insulation. Furthermore, since the capacity level of states differs, the ability to exploit new opportunities appears much more marked in some countries than in others. Given the varieties and specificities of state, both parasitic and the Anglo-Saxon states fall into weak states. Yet, the former is because of low accountability level, whereas the latter is due to low insulation level. On the other hand, both the East Asian developmental and the Nordic states are categorized as strong states. However, the former holds higher insulation, and thus bargaining process is leaded by the interventionist state which only invites state-controlled business associations. The latter, in turn, possesses more widespread accountability, and therefore bargaining encompasses both business and labor peak organizations. The Nordic states, in fact, sustain complex but stable triangular industrial relations through institutionalized consultative mechanisms.
