Social policy alone cannot change the economic environment or the underlying elements in the structure of the economy that are contributing to poverty and volatile employment and income conditions for vast numbers of households. In this sense, there has been a return to early development theories which implicitly assumed the existence of strong developmental States capable of carrying out the suggested coordinated investment programmes. However, times have changed and the tasks that are contemplated for developmental States today are much more complicated than those conceived in the 1950s. However, policy space cannot be of much use unless there is a Government capable of using it. Wade (1990) has documented the important role that States played in “governing the market” in the first-tier East Asian newly industrializing economies as they went about achieving catch-up growth and poverty reduction.