Democratic governance faces unprecedented challenges across the OECD world and beyond. Enormous strains will be placed on states' resources and their governing capacities to deal with the combined effects of the financial crisis, climate change, and demographic change. The basic foundations ofestablished "statehood" will be tested. At the same time, the architecture of the state has fundamentally changed over the past three decades. The Governance Report 2014 questions whether governments still have the capacities to respond. The Report develops a framework to explore the administrative capacities of the public sector in OECD countries, analyses how these capacities have been used to develop innovative policy approaches to key governance challenges, and explores governance innovations to enhance governance capacities. Inaddition, the Report utilises novel analytical tools to understand the diffusion of major policy innovations over the last 30 to 40 years. The Governance Report 2014 advances the debate on the problem-solving capacity of the modern state in the light of ongoing and future challenges.