The state is needed to provide a legal and fiscal context that encourages
economic development. The rule of law is necessary to provide social and
economic security and the enforcement of economic obligations (Hirst and
Thompson, 1999, pp. 277–80). Government policies protecting property
rights are needed to attract capital investment, a problem for the poorest
developing countries being their exclusionfrom a global order which denies
them investment and a reasonable share of world trade. Capital market
flows are very volatile and can create financial crises as in East Asia in
1997/98. Reducing the risks of such crises and their consequences for
incomes, social unrest and crime requires national institutions and policies,
such as strong legal and regulatory regimes for the financial sector.
Support for the international order has to be managed at the national level
through the institutions of the state. Powerful nation-states are required if
international regulatory regimes, trading blocs, agencies, economic policies
and treaties are to be effective. Nation-states represent societies on interna-
tional agencies and regulatory bodies, supporting international decisions
with national laws and policies. Only through nation-states will such agen-
cies be endowed with legitimacy by, and accountability to, those societies
(Hirst and Thompson, 1999, pp. 274–6). National governments are becom-
ingmoreimportant in promoting and regulating international trade and
investment. National institutions, government strategies and position in the
international system allow states to mediate and resist the effects of global-
ization. The fact that pressure for the establishment of international treaties
and conventions may come from international, non-governmental sources,
such as human rights activists (most of which are nationallybased) or the
‘will of the international community’ does not mean that states no longer
have to consent to international law (Held et al., 1999, pp. 6–14, 63).
Even if the assertions about overwhelming globalization are accepted, it
does not follow that the state is powerless to moderate the effects of interna-
tional economic forces. What is significant is that states vary hugely in
theircapacityto do so. And capacity is not a function of globalization. Such
capacity – to respond to economic change by mobilizing investment, increas-
ing manufactured exports, and co-ordinating technological innovation – is the
key variable in the analysis of the state in a global economy (Weiss, 1998).
Conclusion
The literature on the post-colonial state aids understanding of the factors
identified by dependency theorists as being central to the nature of the state
The State in the Third World 131