This book looks at the process of state-building in Ukraine from a political economy and institutional perspective. Weak and distorted state capacity has come to be widely recognized as a key obstacle to successful transformation. However, so far little systematic research has been carried out on state capacity and on how to explain its development. The book provides new insights in considering the evolution of Ukraine since 1992, offering an in-depth view of institutional development in crucial areas. It draws comparisons with developments in Belarus, Lithuania, and Russia (based on field research). To capture the process of state-building empirically, focuses on the extraction and expenditure systems which are a central pillar of state capacity and also a central link between citizens and the state. The book also sheds light on how Ukraine's potential 'second transition' currently under way will have an impact on its institutional system.