In this chapter, the focus is on issues that involve politics. More specifically, we look at the role of political leadership and state autonomy in development. The institutions involved determine the quality of governance in a country, but they are not the only ones to have this effect. Institutions influencing state capacity constitute a second type of governance-related institution. In order to keep the size of the present chapter within a reasonable range, however, we have decided to deal with state capacity issues in the next chapter.