This chapter examines the concept of the modern state in a developing world context. More specifically, it considers the characteristics and capabilities that define the modern state and the extent to which the state can be regarded as an autonomous actor with the potential to influence development outcomes. After providing an overview of the role of the state as a potential driver of development, the chapter discusses statehood in the contemporary world and how the evolution of the modern state can be understood. It then asks how different patterns of state formation affect the ways that states further consolidate and develop. It also explains the distinction between the ‘weak’ state found in the majority of developing countries and the ‘strong’ state typically found in the industrialized parts of the world. Finally, it tackles the question of institutional reform from ‘the outside’ and its implications for development.