A capable and accountable state supported by an effective civil society and private sector is essential for reducing poverty and achieving the MDGs, as well as other national development objectives. It is fundamental to long-term sustainable development, and hence also critical to aid effectiveness. Without appropriate policies, well functioning organisations and a well performing human resource base, in both public and private sectors, there is little that financial resources alone—including ODA—can do to address poverty in a sustainable manner. Meeting the collective commitments to aid effectiveness and, most important, improved development results means putting the development of national capacities at the heart of development co-operation.