This chapter focuses on the processes of state formation in developing countries. Political and economic developments are closely interconnected. Political instability and ethnic conflict can be a major obstacle to economic development. 

The political aspects of development will be discussed from two perspectives. In the first place, the interactions between state formation and economic development will be analysed. In the second place, the characteristics of political systems and political developments will be discussed as independent aspects of development in their own right.

The chapter contains tables with data on war casualties, political regimes and political instability in developing countries.