The assistance and expertise offered by industrialised countries to less developed ones, in order to help them set up institutional frameworks and regulations.
Capacity building is part of development aid programmes. These programmes provide experts to help design, build or modernise physical as well as immaterial infrastructure. This last category covers law, justice, police, education, health, research… It deals with culture, systems and values. Capacity building may consist in advising as well as in training.
Capacity building is generally highly appreciated by recipient countries. This activity is simply fundamental in the long term, for the recipient country as well as for the donor. For the former, the expertise received will affect the way the country is working and its choice of systems. For the latter, designing and shaping these cultural and political fields is a wonderful tool for influence and soft power. It operates on minds, which is much more important on the long term than gaining a contract.
There is a kind of clever task sharing between firms and states: firms compete on bids and contracts while states shape a long term favorable ground, in order to make it look as much as possible like its own.