Working Paper Series

Abstract: Although the concept of state capacity seems to highlight the importance of the state, I argue that the core insight that emerges from the literature review is quite the opposite. This insight is that the government can only do so much. Certain important kinds of state capacity depend on whether and how the state is connected to important stakeholders in society. After reviewing three concepts of state capacity in the literature, namely the capacity for social control, the capacity for industrial policy, and the capacity for industrial upgrading, I discuss the capacity for healthcare reform, which is relatively new in the literature about state capacity. In this new scenario, what the government finds is the medical profession who has been given the privilege for professional self-regulation. How to deal with a profession who has been enjoying a lot of autonomy, and who is unlikely to give up any power without seeing any return to its ?sacrifice,? will pose a great challenge to the state. I argue that when the issue is about state capacity for healthcare reform, the connection between the state and the medical profession as one of the most important stakeholders in the healthcare sector becomes even more critical.