The paper reviews the policies and institutions used by governments that have successfully promoted economic development. It examines which policy instruments countries can still wield in the current global trading and financial regimes. It concludes that the openness and nature of short-term financial markets eliminate state use of interest and exchange rate policies while GATT/WHO eliminate trade and commercial policy. As a result, developing countries are severely limited in the means they can employ to promote development. We conclude by suggesting four reforms to increase state autonomy and lessen the frequency and severity of financial crises. (C) 2000 Elsevier Science B.V. All rights reserved.