The threat of nationalist pressures on state effectiveness is revealed by the fact that they have destabilized governments in both rich and poor countries. The dilemma for state-builders is that under common poor-country conditions, any resultant states have been weak, incomplete, and often regress to basic tribal and ethnic architecture and corresponding conflicts. The tragic irony is worsened by the fact that they have often escaped from the very poor countries that suffer weakened governments from ethno-nationalism at home. Few countries, regardless of levels of wealth, have been able to deal with the technical policy causes of the allocational inefficiencies that in part lead to the regional and income inequities which have been driving the ultranationalists. Well-performing governments have strong institutions which are able to affect budgetary outcomes at three levels: aggregate fiscal discipline, allocation of resources consistent with strategic priorities and efficient use of resources in implementation of policies.