The idea that a competent state should be the dominant model of organization for political communities has always been at odds with the reality of ineffective governments in many parts of the world. With the end of the bipolar confrontation, the strategic interest in keeping these ‘fragile states’ alive significantly declined while the onset of globalization processes dramatically increased interdependence and interconnectedness. Thus, limited statehood (or ‘state fragility’) became associated with global security threats such as international terrorism and organized crime. The international interventions in ex-Yugoslavia, Iraq and Afghanistan led to the emergence of ‘state-building’ to solve these problems. The rather mixed results of state-building efforts resulted in a more modest concept of ‘stabilization’ that focuses on immediate conflict management and preventing institutional failure. Building on the various theoretical and empirical developments, we suggest ‘governance-building’ as an alternative concept to guide policy vis-a-vis areas of limited statehood.