Contracting Out, Legitimacy, and State Building

Contracting out what are traditionally regarded as core sovereign functions is an iconic example of governance in areas of limited statehood. When national political authorities share sovereign authority with external actors, at least two key questions arise. First, when will such arrangements be accepted as legitimate? Second, how can they boost the capacity and legitimacy of state institutions? We argue that the dominant source of external actors’ legitimacy will be their performance. External actors that perform well can help create ‘islands of excellence’ in the domestic system that can raise the effectiveness and legitimacy of other local institutions. However, this type of virtuous cycle is rare and depends on external, domestic elite, and public support – a formula not easily achieved. We illustrate these arguments with several brief case studies.