State formation and capacity in Ethiopia

The turning point has been sealed with World Development Report 1997 by the World Bank, where, following the approach of the new institutional economy, government effectiveness and other dimensions of good governance are recognised as premises for better development outcomes: “the state is essential for putting in place the appropriate institutional foundations for markets”2. The attention is therefore on state capacity, namely, “the ability to undertake and promote collective actions efficiently—such as law and order, public health, and basic infrastructure”3, as necessary prerequisites to ensure development and peace.