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 m akes government regulation more important, and governments remain crucial i n 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 intern ationally, the policies of national governments still shape the institution al and legal frameworks within which the market operates. Ironically, altho ugh states have lost some power around the world, citizens have come to mak e more and more demands on them. Since purely market mechanisms of allocati on tend to exacerbate differences in wealth and power, it is especially imp ortant for governments to find ways to maximise social and political equali ty in the years ahead. This is true for the higher-income countries in an e ra when they are curbing the old provisions of the welfare state, just as i t is for the least affluent nations, where building state capacity remains a central task.