Chapter 2 presents a theory of globalized state-led development that helps us understand the conditions under which this model is adopted and implemented. It begins with the developmentalist dilemma faced by states: how can they help national firms benefit from global markets while managing the domestic political tensions these interventions provoke? This tension has important points of comparison with the challenges faced by the East Asian developmental states, yet has become more acute. Globalization and democracy have deepened the developmentalist dilemma by increasing the relevance of international production and innovation networks, constraining policy space, and heightening political contestation. A theory of globalized state-led development explains the conditions under which governments navigate these competing pressures by supporting national firms at home and abroad.