One of the thorniest foreign policy issues facing the United States is how to address the challenge posed by failing and failed states. Prior to September 11th, some foreign policy realists argued that the effects of state failure did not affect core U.S. national interests. In the aftermath of 9/11, this attitude has shifted, as Afghanistan was an example of a failed state, essentially taken over by a terrorist group, from which the attack on the United States was launched. Today the United States is engaged in formidable "nation-building" efforts in Afghanistan and Iraq.

Dr. Fukuyama's new book, State-Building: Governance and World Order in the 21st Century (Cornell University Press), addresses the issue of state capacity in a broad context. He observed that in some countries, which lack effective institutions and with governments unable to fulfill the most rudimentary functions, "the state" barely exists. In Western countries, the 20th century witnessed the dramatic expansion of state functions and, with that growth, a sharp increase in the percentage of gross domestic product controlled by the state (e.g., 40% in the United States, 70% in Sweden).

Dr. Fukuyama argued that countries vary widely along two indices. The first is the scope of state functions, which ranges from minimalist (e.g., national defense) to activist (e.g., industrial policy). The second is state capacity, which ranges from ineffective and weak to effective and strong institutionalization. The United States is an example of a state with a more limited scope of function (e.g., providing core functions but with many sectors deregulated) and high institutional capacity; Turkey and Brazil are examples with an ambitious scope of state function (e.g., running industrial enterprises) and relatively low institutional capacity. New Zealand is a case where the government reduced its scope of function, but became more institutionally capable.

While institutionalization is key to stability and growth, the track record of the United States and other Western countries in nation-building overseas, he concluded, is abysmal. Even when outside involvement leads to progress, it is often quickly reversed once that external support is withdrawn. Often capacity-building is counterproductive because outside organizations focus more on providing a service than in building capacity for the long-term.

The core issue, Fukuyama argued, is that we really do not know how to create state capacity. "[T]he field of public administration," he observed, is "more of an art than a science." Instead of exporting "best practices" from one country to another (as is commonly done by some international institutions), Fukuyama called for a context-specific approach in which the fashioning of public institutions is informed by local norms and cultures.

Robert S. Litwak, Division of International Studies