This chapter examines what leads to the growth or decline of state capacity in the contemporary period by developing propositions drawn from a variety of perspectives in the scholarly literature and subjecting them to large-sample empirical tests using the State Capacity Dataset. In the process, the chapter contributes to the de-centering of the study of state formation and state capacity-building in three ways. First, by focusing on states in the contemporary period, it tests the extent to which foundational theories in the literature generalize beyond the historical contexts in which they were developed. Second, the approach is geographically inclusive, moving beyond Eurocentric accounts. Third, the approach does not give war primacy over any other factor that may affect the formation and growth of states.