With the benefit of almost 20 years of hindsight, in this article we evaluate the legacy of state-building in Timor-Leste. We find that much of the academic critique of the state-building mission has proven to be largely accurate: political and economic development has indeed been challenged by the legacy of key decisions made during the early state-building process. First, the focus on centralised state institutions has led to the underdevelopment of administrative, political, and economic decentralization. Second, the partisan nature of the constitution-making process has facilitated the continued concentration of political and economic power in the hands of certain elites. Third, the ambiguous—and at times conflictual—division of powers between state institutions has facilitated the emergence of political clientelism and undermined broad-based economic diversification and development.

In the later 1970s and 1980s, to cope with development difficulties, most nations in the socialism system tried to explore their own paths towards development. These included the “Reform” of the Soviet Union and China and “Doi Moi” in Vietnam. Due to the leading socialist state, the Soviet Union’s failed “Reform,” the whole socialist system began to fall apart and most of its countries have shifted towards capitalism-based development. However, China and Vietnam have remained consistent in their socialist paths, maintaining suitable methodologies through respective reforms. Given this line of reasoning, this article objectively shares some achievements and challenges Vietnam has encountered over the past thirty years of renovation and offers implications for the developmental process.

The overall record of peacebuilding as a post-Cold War liberal project has proved to be more positive than negative, especially in conflict termination. However, the peacebuilding agenda has had its limits in terms of progress in democratization, judicial institution-building and economic development, despite potential for greater success. Peacebuilders are more likely to succeed in transforming societies torn by armed conflict if they can avoid making the process excessively competitive. Democratization and capitalist development are already competitive processes, and the pursuit of retributive justice takes the form of judicial punishment. Together these strategies can form a recipe for competition and conflict, especially in institutionally weak states where the history of distrust among warring factions or former enemies is long and intractable.