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The term capacity development, and to a lesser extent, capacity building, started to be substituted for institutional development and institution building in donors’ vocabulary for the last couple of decades. As mentioned in the book, capacity development is used along with capacity building,¹ institutional development, public sector reform (PSR), and governance reform, frequently to mean the same thing. For example, capacity development is understood as building and strengthening human, organizational, institutional, and societal capabilities in developing countries mainly focused on their public administration systems (IMF, 2007). The World Bank's Strategy for Reforming Public Institutions and Strengthening Governance defines capacity building as “building effective and accountable [public sector] institutions to address development issues and reduce poverty in borrowing countries,” and emphasizes its importance as the core of the World Bank's activity (2000a, p. xii).