The history of state reform in today’s established industrial countries offers hope-and gives pause-to today’s developing countries. Until the last century many of the problems that now appear to have reduced the effectiveness of the state in the developing world were in plain evidence in Europe, North America, and Japan.

But the problems were addressed, and modern states with professional systems emerged. This gives us hope. But it also gives us pause, because institutional strengthening takes time.

The reforms of the Meiji Restoration, which launched Japan onto the path of development, took almost twenty-five years to take root. A more capable state can be built, but the process will be slow and will require immense political commitment. It is urgent to act now.

Over the past fifteen years many governments have responded to internal and external pressure by launching far-reaching reforms to improve their performance.Typically, changes in macroeconomic policy- -dealing with exchange rates, fiscal policy, and trade policy-have come fastest.

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These reforms have political implications but do not require the overhaul of institutions. They can be undertaken quickly, often through decree, by a small group of competent technocrats. All it takes is the political decision to make the change.

But other state reforms, dealing with regulation, social services, finance, infrastructure, and public works, cannot be accomplished so rapidly because they involve changing institutional structures established for different purposes, to fit different rules of the game.

This kind of institutional reform involves wrenching changes in the way government agencies think and act, and often a complete overhaul of long-established systems of patronage and corruption. But such change is absolutely essential if the capability of the state is ever to improve.

The two together-good policies and more capable state institutions to implement them-produce much faster economic development.

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Comprehensive reform along these lines will take a great deal of time and effort in many developing countries, and the agenda varies considerably from region to region (See Box). Reform wills also considerable political opposition.

But reformers can make a good start by strengthening central agencies for strategic policy formulation, introducing more transparency and competition, hiving off activities a agencies with easily specified outputs, seeking more feedback from users about the delivery of servicer and working with labor unions on programs that will enable workers to seek security in change rath” than seek security against change.