In Chapters I and 2, we discuss in more detail a number of conceptual and theoretical aspects of governance. While some aspects of governance are fairly novel to the western political culture,it is also true that governance understood as a reliance on the private or ‘thers’ sectors on policy formulation and implementation are established practices and traditions. However, the compounded effect of the financial crisis of the state, the globalization of the economy and the growing importance of transnational institutions such as the European Union (EU) , the North American Free Trade Association (NAFTA), and the World Trade Organisation (WTO) has been a profound challenge to the traditional model of states and what constitutes state strength. Chapter 3 looks at these changes and how they, each in its own different way,pose challenges to the state.